Globalization, cooperation, common economy, common defense… Leading countries of the world and the countries which want to share and/or compete on these issues should be obviously engaged in innovative, creative and useful studies in parallel with the technological developments. Today, the countries willing to increase competitive power in international markets are leading countries in terms of innovation capacity and information creation. Countries aiming at integration into the world economy see the innovation as a key for the long term competitive power. And R&D activities lie at the bottom of innovation.

According to the international statistics, countries with high volume of R&D activities and allocating the greatest share for R&D activities from their budget and GDP are much more developed than other countries in terms of wealth and competitive power.

In recent years, many regulations have been introduced for increasing the international competitive power of our country in parallel with our economic development target. The regulations introduced aim at encouraging Research and Development (R&D) and human resource investments (investments in researchers and scientists) with the ultimate aim of reinforcing our technological development level.

First one of these regulations is the Law no 4691 on Technology Development Regions which became effective in 2001. Furthermore, following the R&D Reduction practice added to the Corporate Tax Code in 2004, Law no 5746 on Supporting Research and Development Activities was accepted on 28.02.2008 and became effective on 01.04.2008; with this Law, it is aimed to provide many reductions, exemptions, supports and incentives to the taxpayers who are performing or will be performing R&D activities.

Our study named "R&D Incentives in 100 Questions- 2010" has been prepared in order to provide general information on the incentive elements included under these regulations and to provide answers to possible questions to arise within the framework of basic principles.

Best regards.

Ernst & Young Turkey

The study named "R&D Incentives in 100 Questions- 2010"was prepared by Ernst & Young professionals in order to give general information on R&D incentives within the scope of legislation in force as of 30 September 2010 by taking into account the related provisions of Law no 4691 on Technology Development Regions, Corporate Tax Law no 5520 and Law no 5746 on Supporting Research and Development Activities. Ernst & Young and/or Kuzey Yeminli Mali Müşavirlik A.Ş. cannot be held responsible for the information and explanations included in this study. Since our tax legislation is amended frequently and can be interpreted with different views, we recommend ensuring professional assistance from the experts before taking action in any issue.

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