New Limitations on R&D Income Tax Incentives and Notification Obligations to KEP

With the Law No. 7555 on the Protection of the Value of the Turkish Currency and Amendments to Certain Laws and Decree Law No. 635, published in the Official Gazette dated July 24, 2025, various regulations have been amended, including notably the Labor Law No. 4857, the Law No. 5746 on Supporting Research, Development and Design Activities, and the Law No. 4691 on Technology Development Zones.

Among the key changes, the amendment establishes new principles for calculating income tax withholding incentives for design and support employee working in R&D, design, and technology development zones. It also introduces new procedures for written and electronic notifications under the labour law.

A. Regulation on Electronic Notification and KEP (registered e-mail) Obligation under the Labour Law

(Article 23)

The title of Article 109 of the Labour Law (Law No. 4857, dated May 22, 2003) has been amended to "Written or Electronic Notification", introducing new provisions concerning written and electronic notification procedures under labour legislation.

1. Introduction of the KEP System for Notifications (Article 23)

Notifications made within the scope of the Labour Law must be:

• Delivered in writing and signed in person,
• Or, with the employee's written consent, sent via the Registered Electronic Mail (KEP) system.
2. Notices of Termination Must Be in Writing (Article 23)
• All notifications that result in the termination of an employment contract must be made in writing.
• If the employee refuses to sign the written notice, this should be documented in an official report.
3. Requirements for Notifications via the KEP System (Article 23)
• All expenses/costs related to the use of the KEP system shall be borne by the employer.
• Electronic notifications must comply with the relevant legislation governing the KEP system.
4. Scope of the Notification Law to Be Evaluated Separately
• Transactions falling within the scope of the Notification Law (Law No. 7201, dated 11/02/1959) shall be carried out in accordance with the provisions of that law.
5. Entry into Force
• This regulation shall enter into force on the date of its publication in the Official Gazette.

Assessment:

With the new regulation, notification procedures within employment relationships have been transitioned to an electronic format, making the use of a Registered Electronic Mail (KEP) account significantly more important in practice. To ensure compliance in your HR processes, it is recommended to establish the necessary infrastructure in line with this regulation.

B. Amendments to Income Tax Exemptions in Technology Development and R&D Zones

(Articles 11 and 19)

Amendments to Law No. 4691 on Technology Development Zones and Law No. 5746 on Supporting R&D and Design Activities have introduced significant changes concerning the scope and implementation principles of income tax exemptions.

1. Updated Income Tax Exemption in Technology Development Zones

(Law No. 4691 – Article 11)

With the amendment to the third paragraph of Provisional Article 2:

• The income tax exemption is now limited to the portion of the employee's wage that does not exceed forty times the gross minimum wage.
The exemption will be calculated based on the tax amount remaining after deducting the portion corresponding to the
• minimum wage exemption under Article 23/1-(18) of Income Tax Law No. 193.
• Additionally, the term "issued papers" has been revised to "the portion of the issued papers not exceeding forty times the gross minimum wage".
• This amendment will enter into force at the beginning of the month following its publication in the Official Gazette.
2. Income Tax Exemption for R&D, Design, and Software Activities Capped

(Law No. 5746 – Article 19)

• The income tax exemption applied to the wages of employees engaged in R&D, design, and software activities has been aligned with the updated provisions.
• The exemption will now be limited to the portion of wages not exceeding forty times the gross minimum wage.
• The remaining income tax, after deducting the minimum wage exemption specified in Article 23/1-(18) of Income Tax Law No. 193, will be eligible for the incentive.
• Additionally, a sentence added to the fourth paragraph introduces the following explicit provision: "However, the amount to be exempted in terms of wages cannot exceed forty times the gross minimum wage."
• This amendment will enter into force at the beginning of the month following its publication in the Official Gazette.

Assessment:

These amendments establish a cap on the income tax incentive applicable to the wages of employees working in both technoparks and R&D or design centers. To ensure compliance with the new regulations, it is recommended to review existing wage policies and update payroll systems accordingly.

C. Amendment to Social Security Law No. 5510

Article 99 of the Social Security and General Health Insurance Law (Law No. 5510, dated May 31, 2006) has been amended, introducing a significant development. The title of the article has been updated to "Regulations on Social Security, Notifications, and Applications from Abroad," and the following provisions have been added.

1. Possibility of Applying from Abroad (Article 26)
• Applications deemed appropriate by the Ministry may be submitted through:
• Labour and social security consultancy offices abroad, and
• Social security attaché offices.
2. Procedures and Principles to Be Defined by Regulation (Article 26)
• The types of applications that can be submitted from abroad,
• The procedures for submitting applications to the Agency, and
• All other relevant procedural details will be set out in a regulation to be issued by the Ministry.
• This amendment will enter into force at the beginning of the month following its publication in the Official Gazette.

Assessment:

This regulation is intended to facilitate access to social security services, particularly for citizens residing abroad. Further details will be provided once the implementing regulation is published.

D. Legislative Amendments on Notification Obligations of Private Employment Agencies

Recent amendments to Law No. 4904, dated June 25, 2003, on the Turkish Employment Agency have introduced important regulations concerning private employment agencies.

1. Expanded Notification Obligation (Article 24):

Private employment agencies are now required to electronically report data to the Turkish Employment Agency (İŞKUR) regarding:

• Job seekers,
• Open positions,
• Job placements,
• Temporary labour supply contracts,
• Published job advertisements and the individuals referred to them.

These reports must be submitted in the time frame, format, and manner prescribed by İŞKUR.

This amendment will enter into force on January 1, 2026.

2. Sanctions for Failure to Comply with Notification Obligations (Article 25):
• Private employment agencies that fail to fulfill their notification obligations will first receive a warning from İŞKUR.
• If the required notification is not made within 7 days of the warning:
• An administrative fine of 136,190 TL will be imposed.
• If the violation is repeated within one year, the fine will be doubled to 272,380 TL.
3. This provision will enter into force on January 1, 2026.

Assessment:

In this context, it is strongly recommended to review data reporting processes and ensure that notifications are submitted regularly, in accordance with the procedures and principles to be established by İŞKUR.

You can access the relevant Official Gazette here. (In Turkish)

Should you have any queries or need further details, please contact your customer representative.