Ask a Turkish founder why the company sits in a technopark and the answer is usually “the tax”. The answer is right but incomplete. The Technology Development Zones Law No. 4691 and the Law No. 5746 on Supporting Research, Development and Design Activities give a software or deep-tech company three distinct benefits with three different sets of conditions: an exemption of qualifying earnings from income and corporate tax, a payroll-withholding incentive for R&D, design and support staff, and, under Law 5746, an R&D deduction, social-security support and a stamp-duty exemption for companies that qualify as R&D centres or run supported projects. Each has a sunset date of 31 December 2028 in the current text, each has been narrowed or reshaped by amendments in 2021, 2023 and 2025, and one of them, the Additional Article 3 venture-capital obligation, quietly converts a share of the exemption into a mandatory investment. This article sets out what a startup gets, what it must do to keep it, and where founders and their investors are most often surprised in diligence. It follows our guides on ESOPs in Türkiye and share premium.
The earnings exemption under Law 4691
Provisional Article 2 of Law 4691 exempts from income and corporate tax, until 31 December 2028, the earnings that income and corporate taxpayers operating in a Zone derive exclusively from their software, design and R&D activities in that Zone. Three words carry the weight. “Exclusively” means that consultancy, implementation, resale, hosting margins and other revenue not derived from the Zone activity is taxable and must be separated in the accounts; the management company’s approval of the project scope is the boundary. “In the Zone” means that the activity must be performed there, subject to the remote-work percentages discussed below. And “software, design and R&D” means that the company must be able to show a project accepted by the Zone. Where the earnings come from the sale, transfer or licensing of intangibles, the same article authorises the President to make the exemption conditional on the intangible having been obtained through R&D and registered or notified, and to limit the exempt portion by the ratio of qualified to total expenditure; a company monetising IP should check the current Decision before assuming full exemption. The Value Added Tax Law’s Provisional Article 20 adds a VAT exemption for system-management, data-management, business-application, sectoral, internet, gaming, mobile and military command-and-control software produced exclusively in the Zone during the exemption period, without loss of input-VAT deduction.
The payroll incentive: forty times the minimum wage
The third paragraph of Provisional Article 2, as amended by Laws 7263, 7346 and most recently 7555, provides that until 31 December 2028 the income tax calculated on the portion of R&D, design and support personnel wages not exceeding forty times the gross minimum wage, after deducting the tax corresponding to the minimum-wage exemption under Article 23(18) of the Income Tax Law, is cancelled by being deducted from the tax accrued on the withholding return; the same portion is exempt from stamp duty. The mechanics matter: the employee is paid net as usual and the employer keeps the withholding it would otherwise remit, so the incentive is a cash benefit to the company, not the employee, unless the employment contract passes it on. Support personnel benefiting from the withholding and social-security incentives may not exceed ten per cent of the R&D and design headcount, raised to twenty per cent for Zone companies with a total headcount of up to fifteen. Wages for weekly hours above forty-five and for additional work are outside the incentive; wages for earned weekly rest, annual leave and public holidays are inside. The management company audits whether the incentivised staff actually work in the Zone.
Working outside the Zone
Remote work is the point where technopark companies most often lose the incentive without noticing. The statute allows three categories of outside-Zone time to count. First, where part of a Zone project must necessarily be carried out outside the Zone, the President determines what share of the corresponding wages, up to one hundred per cent, remains within the incentive. Second, R&D and design staff pursuing a master’s degree may spend up to one and a half years, and doctoral students up to two years, outside the Zone within the incentive, again within the share the President sets. Third, and most relevant to hybrid teams, time spent outside the Zone in other cases is counted within the incentive up to twenty per cent of the total number of incentivised staff or of the total incentivised working time, and the President may raise this ratio up to one hundred per cent by region, sector or occupational group, or lower it back to the statutory level. Using the outside-Zone allowance requires the management company’s approval and notification to the Ministry, and if the time outside is found to be unrelated to the Zone work, the lost tax and penalties fall on the company. Check the current Presidential Decision on the ratio before designing a hybrid policy; the statutory floor is twenty per cent and the Decision has moved it more than once.
Additional Article 3: the three per cent venture obligation
Since 1 January 2022, an income or corporate taxpayer whose exempt earnings under Provisional Article 2 in a given year reach a threshold must transfer a percentage of that exempt amount to a temporary liability account, up to an annual cap. The statute sets two per cent, a 1,000,000 lira threshold and a 20,000,000 lira cap and lets the President change them. Presidential Decision No. 7953 raised the rate to three per cent and the cap to 100,000,000 lira; for 2026, Presidential Decision No. 10803 (Official Gazette of 31 December 2025, No. 33124) raised the threshold to 5,000,000 lira and kept the three per cent rate and the 100,000,000 lira cap. In practice, therefore, the obligation for 2026 is three per cent of exempt earnings of 5,000,000 lira or more, capped at 100,000,000 lira. By the end of the year in which the account is created, the amount must be used to buy units in a venture-capital investment fund established to invest in entrepreneurs resident in Türkiye, or invested as capital in a venture-capital investment trust or in other entrepreneurs operating in incubation centres under the Law. If it is not transferred by year-end, twenty per cent of the exempt earnings for that year loses the exemption, and the tax is assessed without a tax-loss penalty. The President may reduce the amounts and ratios to zero or increase them up to five times. For a profitable technopark company this is a compliance calendar item with a hard date and a real cost; for its investors it is a diligence question, because a missed transfer is a tax exposure sitting in the balance sheet.
Law 5746: R&D centres and supported projects
Law 5746 runs alongside 4691 and applies to R&D centres, design centres, technology centres and to projects supported by public bodies, TÜBİTAK, international funds or law-established foundations, as well as to companies benefiting from technoventure capital support. An R&D centre is a separate unit within a capital company with its legal or business seat in Türkiye, engaged exclusively in domestic R&D and employing at least fifty full-time-equivalent R&D personnel; Article 4(6) authorises the President to reduce that number to as few as fifteen, an authority that has been exercised and that is the reason mid-sized startups can qualify; check the Decision in force for the current figure. The incentives are: an R&D and design deduction of one hundred per cent of qualifying expenditure from the corporate tax base (Article 3(1)), with unused amounts carried forward and revalued; the withholding incentive under Article 3(2), which since Law No. 7555 of 20 July 2025 applies to the portion of wages not exceeding forty times the gross minimum wage and cancels ninety-five per cent of the remaining tax for doctoral holders and those with at least a master’s in a supported programme, ninety per cent for master’s holders and those with a bachelor’s in a supported programme, and eighty per cent for others; half of the employer’s share of social-security premiums for R&D, design and support personnel, including Zone personnel, paid from the budget appropriation of the Ministry of Treasury and Finance (Article 3(3)); and a stamp-duty exemption for documents relating to R&D, innovation and design activities, capped for wages at forty times the gross minimum wage (Article 3(4)). Article 4(5) prevents double use: a company that takes the 5746 incentives cannot also use Provisional Article 2 of Law 4691 or the R&D deductions in the Income and Corporate Tax Laws for the same items. The whole Law applies until 31 December 2028 (Article 6). Article 3(14) of Law 5746 imposes the same venture-capital obligation on corporate taxpayers on the same terms, measured on the annual R&D deduction (for 2026, three per cent of a deduction of 5,000,000 lira or more, capped at 100,000,000 lira, under the same Presidential Decisions); if the transfer is not made by year-end, twenty per cent of the R&D deduction claimed for that year is disallowed.
What diligence looks for
Investors and buyers test six things. That the management-company project approvals cover the revenue treated as exempt. That the accounts separate exempt and non-exempt earnings and the personnel-time records separate incentivised and non-incentivised hours. That the Zone entry and exit logs, or the approved remote-work records, support the outside-Zone percentages claimed. That support-staff ratios and the forty-times cap have been applied per payroll period. That the Additional Article 3 transfer has been made each year it was due, with the fund or investment documents to show for it. And that the incentives were not stacked with 5746 or general R&D deductions for the same expenditure. Where a founder plans a flip-up, note that the incentives attach to the Turkish company and its Zone activity, and that transferring IP developed in the Zone to a foreign parent raises both the intangible-income condition above and the transfer-pricing questions we discussed in transferring IP to a foreign parent.
We are in a technopark but sell mostly consulting. Are we exempt?
Only the earnings derived exclusively from the approved software, design or R&D project are exempt. Consulting, implementation and resale margins are taxable and must be separated in the accounts; a mixed invoice invites a reassessment.
Does the payroll incentive go to the employee or the company?
To the company: the tax that would have been withheld is cancelled on the withholding return, so the employer keeps it unless the employment contract or an ESOP arrangement passes it on. Gross-to-net promises to staff should be drafted with this in mind.
Can we give employees shares tax-free as a technopark company?
Under Article 17 of the Income Tax Law as re-enacted by Law No. 7524 and amended by Law No. 7582 of 21 May 2026, an employer that qualifies as a technoventure company under Ministry criteria may grant free or discounted shares whose fair value at grant does not exceed twice the employee’s annual gross wage without income tax, subject to claw-back from the employer, with late-payment interest but without a tax-loss penalty, if the employee disposes of the shares within two years (all of the exempted tax), three to four years (75 per cent) or five to six years (25 per cent). Our ESOP article sets out the detail.
Related: technopark tax exemptions · R&D incentives (Law 5746) · withholding tax · conditional capital for ESOPs.
Sources. Technology Development Zones Law No. 4691 (Provisional Article 2, Additional Article 3); Law No. 5746 on Supporting Research, Development and Design Activities (Articles 2–4, 6, as amended by Law No. 7555); Value Added Tax Law No. 3065 (Provisional Article 20); Income Tax Law No. 193 (Articles 17, 23(18)). Statute links open the official Turkish texts on mevzuat.gov.tr.
This article is provided for general information only and does not constitute legal advice. Please seek legal support for an assessment of any specific matter.
