VZCZCXYZ0009
RR RUEHWEB

DE RUEHAK #0542 0801429
ZNR UUUUU ZZH
R 201429Z MAR 08
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 5650
INFO RUEHIT/AMCONSUL ISTANBUL 4024

UNCLAS ANKARA 000542 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: TU EIND TPHY TNGD
SUBJECT: NEW R&D LAW GIVES MORE INCENTIVES FOR PRIVATE 
RESEARCH 
 
 ¶1. (SBU) Summary: We met with Dr. Omer Anlagan, Vice 
President of the Scientific and Technological Research 
Council of Turkey (TUBITAK), to discuss the current state of 
research and development (R&D) in Turkey, and TUBITAK's 
expectations for the new R&D law, which passed on February 
¶28.  Turkey already encourages R&D by giving income and 
employment tax exemptions for small firms working in the 
country's "Technoparks," through research grants and loans 
provided by TUBITAK, and by giving research companies full 
intellectual property rights to the results of applied 
research they fund.  The new law substantially increases 
TUBITAK's funding for research, and allows large research 
firms to obtain tax benefits with or without locating in a 
technopark.  Anlagan said that foreign firms that establish a 
Turkish subsidiary would be able to benefit, although there 
will be a requirement to have a majority of Turkish 
employees.  The combination of research grants and tax 
exemptions may be a powerful tool to attract applied research 
work to Turkey.  However, without changes in the rigid work 
permit system for foreign workers, even these incentives may 
not be able to entice the high-tech companies the GOT hopes 
to attract. End Summary. 
 
¶2. (U) Anlagan said TUBITAK distributes research funding on 
behalf of the Turkish government.  In 2005, the Turkish 
government decided to increase its R&D spending in order to 
improve productivity and reduce the trade deficit.  To do 
this, the government set a target of two percent of GDP (USD 
424 billion) for R&D funding.  The GOT hopes to exceed one 
percent of GDP in 2008, and reach the two percent mark by 
¶2015. 
 
¶3. (U) TUBITAK provides research grants to both academics and 
the private sector.  The academic grants are limited to USD 
300,000.  In return, TUBITAK expects the grant recipients to 
publish academic papers on their research.  Private sector 
recipients can receive grants of up to half of their R&D 
operating costs for applied research.  In order to get these 
grants, the project must involve applied science and aim to 
increase productivity in business in Turkey.  After the 
research is completed, the company retains all intellectual 
property rights, even if TUBITAK funded 50% of the research. 
TUBITAK sees this as a way to improve Turkish companies' 
efficiency, competitiveness, and to reduce the trade deficit. 
 
4 (U) The GOT also provides tax incentives for companies who 
engage in R&D in one of several "technoparks" designated for 
R&D, usually located near universities.  Companies working in 
these technoparks pay neither corporate income tax nor 
payroll taxes for employees.  This led larger companies, who 
had existing research facilities outside of the technoparks, 
to lobby for the same benefits.  Anlagan said that the new 
R&D law passed on February 28th extends these tax benefits to 
outside companies, provided that they have more than 50 
employees in their R&D departments.  Anlagan said that 
foreign companies that set up Turkish subsidiaries were 
already eligible for TUBITAK research grants.  Under the new 
law, foreign companies that set up Turkish subsidiary 
research companies can qualify for the tax exemptions. 
Anlagan noted, however, that the law will require that 60% of 
the employees be Turkish nationals. 
 
¶5. (SBU) Comment: The combination of generous tax exemptions, 
letting companies keep 100% of intellectual property rights 
and more research grants to for-profit companies for applied 
research in Turkey may prove to be a powerful incentive for 
foreign companies.  The GOT hopes to attract foreign 
high-tech companies to Turkey and, for some, these incentives 
will be very attractive.  However, one of the major 
complaints of foreign companies operating in Turkey is the 
onerous and difficult system of obtaining work permits for 
foreign workers, even for highly paid essential technical 
experts.  This restriction will greatly reduce the 
attractiveness of the R&D incentives to foreign companies, 
who generally want their own experts conducting applied 
research.  End Comment. 
 
Visit Ankara's Classified Web Site at 
http://www.intelink.sgov.gov/wiki/Portal:Turk ey 
 
WILSON