Law No. 4691 on TECHNOLOGY DEVELOPMENT ZONES

Law No. : 4691

Date of Adoption : June 26, 2001

Published in the Official Gazette: Date: July 6, 2001, Issue No.: 24454

Published in the Düstur : Series : 5, Volume : 40

Purpose

Article 1 – The purpose of this Law is to generate technological knowledge, develop innovations in products and production methods, improve product quality or standards, increase efficiency, reduce production costs, commercialize technological knowledge, support technology-intensive production and entrepreneurship, and facilitate the adaptation of small and medium-sized enterprises to new and advanced technologies, and—taking into account the decisions of the High Council of Science and Technology—to create investment opportunities in technology-intensive fields, provide employment opportunities for researchers and qualified personnel, facilitate technology transfer, and establish the technological infrastructure necessary to accelerate the inflow of foreign capital that will provide high/advanced technology.

Scope

Article 2 – This Law covers the establishment, operation, management, and supervision of Technology Development Zones, as well as the duties, authorities, and responsibilities of the individuals and organizations involved.

Definitions

Article 3 – For the purposes of this Law:

a) “Ministry” means the Ministry of Industry and Trade;

b) Technology Development Zone (Zone): An area where companies utilizing high/advanced technology or focused on new technologies produce or develop technology or software by making use of the facilities of a specific university, high-technology institute, or R&D center or institute, operate to transform a technological invention into a commercial product, method, or service, and thereby contribute to the development of the zone; located within or near the premises of the same university, high-technology institute, or R&D center or institute; a site where the academic, economic, and social structures are integrated, or a technology park possessing these characteristics,

c) (Amended: 2/3/2011-6170/1) Research and Development (R&D): Research and development refers to creative work conducted on a systematic basis to expand the body of knowledge comprising culture, human experience, and societal understanding, and to utilize this knowledge to design new processes, systems, and applications, including software;

d) R&D Centers or Institutes: Publicly owned facilities equipped with qualified personnel and modern machinery, hardware, and software, where R&D activities aimed at technology and product development are carried out,

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e) Production Units: Production units established or operated by natural or legal persons within the Region in accordance with the purpose of this Law, which are based on new and high technologies and do not harm the environment,

f) Entrepreneur: Natural or legal persons who wish to benefit from or are currently benefiting from the services and facilities in the Zone,

g) (Amended: 2/3/2011-6170/1) Innovation: Processes and their outcomes created through the concept of a new product, good, service, application, method, or business model that can successfully address social and economic needs and be successfully introduced into existing markets or create new markets,

h) Product Innovation: A technologically new product that, when compared to the previous product generation, exhibits fundamental technological differences in terms of its materials, components, and the functions it performs,

ı) Innovation in Production Methods: A method used in the production of new or improved products that cannot be manufactured in traditional production facilities, or in the production of currently manufactured products using new techniques,

i) University: Universities approved by the Higher Education Council that have fully established their structure in the fields of engineering and basic sciences—both in terms of human resources and technical equipment—and possess a sufficient number of research personnel at the doctoral student level,

j) (Amended: 2/3/2011-6170/1) Founding Board: A committee composed of representatives from at least one university or high-technology institute located within the Region or in the province where it is situated, as well as representatives from public R&D centers or institutes and other organizations; this committee is responsible for all matters and procedures related to the establishment of the Region before the incorporation of the Region’s management company,

k) Management Company: A company established as a joint-stock company in accordance with this Law, responsible for the management and operation of the Region,

l) (Amended: 3/2/2011-6170/1) Software: A set of commands or programs that enables a computer, communication device, or other information technology-based device to operate and perform the necessary operations on the data provided to it, along with the associated code lists, operating and user manuals, and other documents, all designed and developed within a specific systematic framework, as well as all forms of delivery—including licensing, leasing, and the transfer of all rights—of such products, goods, and services,

m) (Added: 2/3/2011-6170/1) R&D Personnel: Researchers, software developers, and technicians directly involved in R&D activities,

n) (Added: 3/2/2011-Law No. 6170, Article 1) Researcher: Specialists holding at least a bachelor’s degree who participate in the design or creation of new knowledge, products, processes, methods, and systems, as well as in the management of related projects, within R&D activities and projects falling under the definition of innovation,

o) (Amendment: March 2, 2011 - Law No. 6170, Article 1) Technician: Individuals who have received higher education in engineering, natural sciences, or health sciences, or who have graduated from the technical, natural science, or health departments of vocational high schools or vocational colleges, and who possess technical knowledge and experience,

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p) (Added: 3/2/2011-Law No. 6170, Article 1) Support Staff: Managers, technical staff, laboratory technicians, secretaries, workers, and similar personnel who participate in R&D activities or are directly related to such activities,

r) (Added: 2/3/2011-6170/1) Software Development Personnel: Qualified personnel who work in the process defined as software development, develop and produce programs, and possess sufficient experience or education in their field,

s) (Added: 3/2/2011-6170/1) Incubator: Structures designed specifically to foster the development of young and new businesses, where office services, equipment support, management support, access to financial resources, and critical business and technical support services are provided under one roof by a single entity,

t) (Added: 2/3/2011-6170/1) Technology Transfer Office (TTO): A structure that facilitates information sharing, coordination, and the direction of research between technology-developing R&D institutions and organizations and technology-using industrial companies or other technology or R&D institutions and organizations; promotes the establishment of new R&D companies; developing cooperation, protecting, marketing, and selling intellectual property rights, and managing revenues generated from the sale of intellectual property,

u) (Added: 2/3/2011-6170/1) Technological Product: A product created by qualified personnel using scientific knowledge and technological research to meet societal needs and raise the standard of living, which is distinctly different from existing products and possesses high added value and competitiveness,

Means.

Establishment

Article 4 – (Amended: March 2, 2011 – Law No. 6170, Article 2)

Applications regarding the Region shall be submitted by the Founding Board. To evaluate the applications, an Evaluation Committee is established under the chairmanship of the General Director of Industrial Research and Development at the Ministry, with the participation of one representative each from the Ministry of Finance, the Ministry of Public Works and Settlement, the Undersecretariat of the State Planning Organization, the Council of Higher Education, the Scientific and Technological Research Council of Turkey, the Union of Chambers and Commodity Exchanges of Turkey, and one representative from a private organization active in the field of technology to be designated by the Ministry.

The Council of Ministers, upon the favorable opinion of the Evaluation Committee and the Ministry’s proposal, decides on the inclusion of additional areas into the Zone or on changes to the Zone’s boundaries. These decisions enter into force upon publication in the Official Gazette.

During the planning process in the Regions, zoning plans and amendments, as well as parceling plans and amendments, are prepared by the Region’s managing company in accordance with the forthcoming regulation and enter into force upon approval by the Ministry. Finalized zoning plans are sent to the relevant institutions for information purposes. Expenses related to the acquisition of land and buildings, planning and design, and the construction of infrastructure and superstructure are the responsibility of the management company.

Implementation projects prepared or commissioned in accordance with the provisions of the Urban Planning Law No. 3194 dated May 3, 1985—for which technical responsibility rests with the project designer and the technical supervisor designated by the management company—are approved by the Ministry.

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In accordance with the implementation zoning plan approved by the Ministry and entered into force, permits and approvals related to land use, the design, and construction of buildings and facilities are issued by the Ministry in accordance with the provisions of Law No. 3194.

Land required in the regions may be acquired in accordance with the provisions of the Expropriation Law No. 2942 dated November 4, 1983.

University lands located within the regional areas may be allocated to the Region’s management company, provided that the respective universities deem it appropriate and grant permission, with the condition that ownership remains with the relevant university. This provision also applies to lands belonging to other public institutions and organizations. If a request is made to establish an easement or grant a usage permit on real property within the Zone that is under the special ownership of the Treasury or under the control and administration of the State, the Ministry of Finance shall grant an easement or usage permit in favor of the management company free of charge for the first five years, and for subsequent years, in exchange for two per thousand of the property tax value of the real estate in question. No revenue share shall be collected from activities conducted on these properties for which an easement has been established or a usage permit granted. The Ministry of Finance is authorized to determine the procedures and principles regarding the implementation of this paragraph and to differentiate the fee for the easement or usage permit by province according to the socio--economic development ranking determined by the Undersecretariat of the State Planning Organization, or to reduce them to zero.

The establishment of a Zone is subject to the presence of a university, a high-tech institute, or a public R&D center or institute within the area designated for the Zone or within the boundaries of the province where the Zone is located, as well as the existence of sufficient R&D and industrial potential in the region and the fulfillment of financial adequacy requirements. The criteria for R&D and industrial potential, as well as financial adequacy, are specified in the relevant regulation.

Land designated as a Zone may not be used for any other purpose under any circumstances.

Management Company

Article 5 – (Amended: 3/2/2011-6170/3)

Among the founders of the managing company responsible for the management and operation of the Zone, there must be at least one university or high-technology institute, or a public R&D center or institute, located within the Zone or in the province where it is situated.

In addition, the management company may include chambers and stock exchanges affiliated with the Union of Chambers and Commodity Exchanges of Turkey, chambers, unions, and federations affiliated with the Confederation of Turkish Tradesmen and Craftsmen, local governments, banks, and financial institutions, domestic and foreign private-law legal entities, foundations, cooperatives, and associations related to R&D and technology development, relevant public institutions, and exporters’ associations may become founding partners or join as partners at a later date.

Local governments may become partners in the managing company based on a decision by their own council, without the need for any further procedure.

Foreign private-law legal entities may become partners in the managing company within the framework of the Direct Foreign Investment Law No. 4875 dated June 5, 2003, and the provisions of relevant legislation.

The qualifications required for individuals to be appointed by the Board of Directors to the senior management of the managing company’s general directorate are determined by regulation.

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The management company is responsible for carrying out planning and project design for the Zone, providing the necessary infrastructure and superstructure services as well as all other services required for the Zone, and establishing incubator centers and technology transfer offices, managing the Region in accordance with the purpose set forth in this Law and the relevant regulations, preventing entrepreneurs and third parties from acting in violation of these provisions, and taking the necessary measures.

A public interest decision is issued by the Ministry upon application by the management company.

The Ministry shall warn the management company operating in the Region outside the scope of the purpose specified in this Law and, granting a specific period of time, shall require it to conduct activities in accordance with its purpose. If, at the end of this period, it is determined that the management company has not operated in accordance with the purpose, the Ministry shall apply to the competent court to terminate the terms of office of the members of the management company’s board of directors, appoint a receiver to manage the company, and liquidate the management company. If the court orders the liquidation of the management company, subject to the rights, obligations, and liabilities of the company and its managers remaining intact, the Ministry shall expropriate the land belonging to the Region that is owned by the management company, along with the real property located thereon, and may transfer the management of the Region to another management company.

The procedures for establishing the management company and submitting the zoning plans for the Region to the Ministry for approval shall be completed within one year from the date of publication of the Region’s establishment decision in the Official Gazette. If these procedures are not completed within this period, the Founding Board shall apply to the Ministry for an extension of the deadline. If the Ministry deems it appropriate, it may grant a one-time extension of up to six months. If the necessary arrangements are not made within this extension period, the Council of Ministers’ decision regarding the declaration of the Region, along with its provisions and consequences, shall be null and void.

Among the partners of the managing company—universities, high-technology institutes, or public R&D centers or institutes—may pay the capital share they have committed to the managing company from their working capital revenues.

The management company is required to submit information regarding its own activities and those of entrepreneurs located in the Zone to the Ministry on a quarterly basis, in accordance with the procedures and principles specified in the regulation.

The managing company shall have all its accounts and transactions audited annually by a certified public accountant authorized under the Law No. 3568 on Certified Public Accountants and Certified Public Accounting Firms, dated June 1, 1989. The certified public accountant shall send a copy of the audit report it prepares to both the management company and the Ministry within the same timeframe.

At the end of each year, the managing company conducts an impact assessment of the support and exemptions provided to itself and to businesses engaged in R&D activities within the Region, and submits a copy of the report prepared on this matter to the Ministry.

Audit

Article 6 – The activities and practices of the managing company and entrepreneurs in the Region are audited by the Ministry.

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Personnel

Article 7 – (Amended first paragraph: 2/3/2011-6170/4) Personnel are employed by the management company and in activities conducted within the Region in accordance with the applicable labor and employment legislation. In the Zones, foreign nationals may be employed as managers and qualified R&D personnel within the framework of Law No. 4875, the Law on Work Permits for Foreigners dated February 27, 2003, and No. 4817, and the relevant provisions of the legislation.

Personnel from public institutions and universities who are needed to serve as researchers or administrative staff in activities located within the Zone may be employed on a full-time or part-time basis with the permission of their employing institutions. Income earned by faculty members, instructors, research assistants, and experts serving on a part-time basis in exchange for these services is excluded from the scope of university revolving funds. Personnel to be employed on a full-time basis are granted unpaid leave by their institutions, and their employment relationships with their home institutions remain in effect. For those subject to the Law No. 5434 on the Retirement Fund of the Republic of Turkey, their retirement rights for the periods spent here shall be preserved, provided that the provisions of Article 31 of Law No. 5434 are complied with. Provisions of Article 36 of the Higher Education Law No. 2547 that conflict with the regulations set forth in this article shall not apply. (1)

Faculty members may carry out work at institutions in the Region, in accordance with the principles of temporary assignments within and outside the country as provided for in Article 39 of Law No. 2547, with the permission of the University Board of Trustees. Income earned in the Region by faculty members assigned to the Region on paid leave shall be excluded from the scope of the university’s revolving fund. In addition, with the permission of the University Administrative Board, faculty members may establish companies in these regions, become partners in an existing company, and/or assume management roles in such companies for the purpose of commercializing the results of their research.

Support and Exemptions

Article 8 – (Amended: 3/2/2011-6170/5)

The infrastructure, administrative buildings, and incubator centers necessary for the establishment of the zones, as well as the costs of incubator programs conducted or to be conducted by the managing company to support R&D and innovation activities, technology transfer office services, and technology cooperation programs—may be covered, to the extent that the managing company cannot cover them, up to the amount allocated in the Ministry’s budget for this purpose.

Businesses may make the investment necessary to produce the technological product obtained as a result of R&D projects they initiate and complete within the Zone, provided that the managing company deems it appropriate and the Ministry grants permission. Production permits for the technological products subject to such investments shall be issued primarily by the relevant institutions and organizations, following consultation with the Ministry. Activities related to these investments are recorded separately from the R&D activities conducted by the investing businesses in the Zone in the ledgers required to be maintained under the Tax Procedure Law No. 213 dated January 4, 1961. Personnel employed in the Zone as a result of these investments and the profits derived from such investments shall be taxed in accordance with the principles applicable to businesses operating outside the Zone and their personnel.

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(1) Pursuant to Article 4 of Law No. 6170 dated March 2, 2011, the phrase “and administrative” was added after the term “researcher” in the first sentence of this paragraph and incorporated into the text.

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The managing company is exempt from stamp tax and fees arising from documents issued and transactions conducted in connection with the implementation of this Law. Municipalities shall not collect wastewater charges from Zones operating wastewater treatment facilities.

The procedures and principles regarding the implementation of this article shall be determined by a regulation to be prepared by the Ministry, following the approval of the Ministry of Finance.

Regulations

Article 9 – The procedures and principles regarding the work of the Evaluation Committee, the site selection for the Regions, the criteria for preparing feasibility reports, their establishment, operation, land use, the activities to be carried out within the Region, and the conditions related thereto, the principles governing the use of the appropriation allocated to the Ministry’s budget for the establishment of the Zones, and other matters concerning the implementation of this Law, shall be regulated by regulations to be prepared by the Ministry within six months from the date this Law enters into force.

Provisions Not to Be Applied

Article 10 – (Amended: 2/3/2011-6170/6)

With regard to activities in the Regions covered by this Law; the Public Financial Management and Control Law No. 5018 dated December 10, 2003, the Court of Accounts Law No. 6085 dated December 3, 2010, the State Procurement Law No. 2886 dated September 8, 1983, and the Public Procurement Law No. 4734 dated January 4, 2002, shall not apply.

Transitional Provisions

Transitional Article 1 – Technology parks whose establishment was approved by the Ministry prior to the effective date of this Law shall, subject to compliance with the provisions of this Law, be deemed “Zones” upon the entry into force of this Law and shall benefit from all exemptions and support provided by the Law.

Transitional Article 2 – (Added: 12/25/2003 – Law No. 5035, Article 44)

(Amended first paragraph: March 2, 2011 – Law No. 6170, Article 7) The income earned by management companies under the provisions of this Act, as well as the income and corporate tax payers operating in the Zone, shall be exempt from income and corporate taxes until December 31, 2023, with respect to the income derived exclusively from software and R&D-GE activities within the Zone shall be exempt from income and corporate taxes until December 31, 2023.

(Amended second paragraph: March 2, 2011 – Law No. 6170, Article 7) The salaries of R&D and support staff working in the Zone in connection with their duties are exempt from all taxes until December 31, 2023. The number of support staff eligible for this exemption may not exceed 10 percent of the number of R&D staff. The managing company shall verify whether individuals whose salaries benefit from the income tax exemption are actually working in the Zone. However, for R&D personnel working on R&D projects conducted by entrepreneurs located in the Zones, a portion of the salaries corresponding to the time they must spend outside the Zone—with the managing company’s approval—in connection with their duties within the Zone is excluded from income tax. The amount of compensation to be excluded from income tax is determined by a regulation to be prepared with the approval of the Ministry of Finance. If it is determined that the time spent outside the Zone with the managing company’s approval is not related to the duties performed within the Zone, the relevant business is liable for the tax loss and any related penalties.

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(Added paragraph: 12/30/2004 – Article 41 of Law No. 5281)The provisions of this article also apply to the TÜBİTAK-Marmara Research Center Technology Free Zone management company, Income and Corporate Tax taxpayers operating in this zone, and the salaries of researchers, software developers, and R&D personnel working in the zone in connection with their duties.

Transitional Article 3 – (Added: March 2, 2011 – Article 8 of Law No. 6170)

Zones established in accordance with the purpose of this Law prior to the effective date of this article shall bring their status into compliance with this Law within one year from the effective date of this article. The provisions of Article 5 of this Law shall apply to those that fail to bring their status into compliance with this Law within the specified timeframe.

Entry into Force

Article 11 – This Act shall enter into force on the date of its publication.

Implementation

Article 12 – The Council of Ministers shall enforce the provisions of this Act.

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AMENDMENTS AND ADDITIONS TO LAW NO. 4691

OR PROVISIONS ANNULLED BY THE CONSTITUTIONAL COURT

LIST OF PROVISIONS