Obligation to Invest in Startups in Technoparks and R&D Centers

As BV Growth Fund, since receiving our first capital commitments from investors at the end of 2020, we have invested in more than 50 Turkey-based, early-stage, and innovative technology-focused companies. At Boğaziçi Ventures, we go beyond investment by actively supporting the growth and development of our portfolio companies. In this process, we also launched our newsletter, BV Insights, to enhance sectoral knowledge sharing.

As BV Growth Fund, since receiving our first capital commitments from investors at the end of 2020, we have invested in more than 50 Turkey-based, early-stage, and innovative technology-focused companies. At Boğaziçi Ventures, we go beyond investment by actively supporting the growth and development of our portfolio companies. In this process, we also launched our newsletter, BV Insights, to enhance sectoral knowledge sharing.

In this article, with the contributions of Sworn Financial Advisor Aydın Yılmaz, we present critical information and recent regulatory changes regarding the obligation for companies operating in technoparks and R&D centers to become investors, a topic we previously addressed in our article BV Portfolio GSYF Options for R&D Company Obligations. We examine in detail the impact of Presidential Decree No. 7953 and related legislative updates on companies, and highlight how these new regulations can turn into opportunities.

Key Legal Update

For individuals and legal entities operating in R&D centers and technoparks that benefit from corporate tax exemptions in their declarations:

• With Presidential Decree No. 7953, effective January 1, 2024, the lower limit of deductions/exemptions benefited through the annual declaration has been raised from TRY 1,000,000 to TRY 2,000,000 (under Article 3/14 of Law No. 5746 on Supporting Research, Development and Design Activities and Additional Article 3 of Law No. 4691 on Technology Development Zones).
• At the same time, the venture capital investment fund (GSYF) investment obligation ratio for taxpayers benefiting from these incentives has increased from 2% to 3%.

New Obligation for Beneficiaries

Taxpayers who, in their 2023 corporate tax declaration, benefited from:

• R&D deduction (Law No. 5746), or
• Technopark exemption (Law No. 4691)

in amounts exceeding TRY 2,000,000, must:

• Allocate 3% of the deduction amount (capped at TRY 100,000,000 annually) from their 2023 profits into an equity account (e.g., 549 Special Funds Account) by the date they receive their corporate tax accrual, and no later than December 31, 2024.
• Use these funds by year-end 2024 to purchase shares of a venture capital investment fund (GSYF) established to invest in Turkey-based startups, or alternatively, invest directly as equity in venture capital investment companies (GSYO) or startups operating in incubation centers within the scope of Law No. 4691.

⚠️ These amounts are not debt and cannot be reclaimed.

Definitions

• Venture Capital Investment Fund (GSYF):
  A pool of assets without legal personality, established for a specific period under an internal statute, managed by portfolio management companies authorized by the Capital Markets Board (SPK). It consists of funds collected from qualified investors and invested on their behalf under the fiduciary ownership principle.
• Venture Capital Investment Company (GSYO):
  A joint-stock company subject to the registered capital system, established or converted for the purpose of issuing shares to operate a portfolio consisting of venture capital investments, capital market instruments, and other assets specified by the SPK.
• Incubation Center (per Law No. 4691):
  Structures designed to support especially young and new businesses by providing entrepreneurs with office services, equipment, management support, access to financial resources, and essential business and technical services, under one roof, either inside or outside of a technopark.
• According to the General Directorate of R&D Incentives of the Ministry of Industry and Technology, the term "venture capital investment fund established to invest in Turkey-based entrepreneurs" refers to either:
  • Funds established under the Capital Markets Law, or
  • Foreign funds whose official documentation (e.g., fund statutes) states that at least 80% of their portfolio will be invested in technology startups in Turkey.

Consequences of Non-Compliance

If this investment obligation is not met or is partially met, companies benefiting from corporate tax exemptions in technoparks and R&D centers will face the following penalty:

• 25% of the exempted profit (reported in the annual declaration) will no longer qualify for exemption in that year.
• The unpaid taxes related to this amount will be assessed with late interest but without tax loss penalties.