April 29, 2014 TUESDAY Official Gazette No. 28986
From the Ministry of Science, Industry, and Technology:
REGULATION ON THE TECHNOLOGICAL PRODUCT INVESTMENT SUPPORT PROGRAM
REGULATION
CHAPTER ONE
Purpose, Scope, Legal Basis, and Definitions
Purpose and Scope
ARTICLE 1 – (1) The purpose and scope of this Regulation are to enable the national economy to achieve a structure capable of competing at the international level through industry-oriented R&D-and innovation projects, as well as technological products resulting from R&D activities conducted using internal resources and for which patents have been obtained, to be carried out by natural and legal persons established in Turkey.
Legal Basis
ARTICLE 2 – (1) This Regulation is based on prepared pursuant to subparagraphs (d) and (f) of the first paragraph of Article 8 of the Decree-Law No. 635 on the Organization and Duties of the Ministry of Science, Industry, and Technology, dated June 3, 2011.
Definitions and Abbreviations
ARTICLE 3 – (1) The terms used in this Regulation shall have the following meanings:
a) Intermediary institution: Banks established in Turkey that will implement the interest subsidy,
b) R&D project: A project for which the purpose, scope, general and technical description, duration, budget, special conditions, and the amounts of in-kind and/or cash support to be provided by other institutions, organizations, and natural or legal persons, the principles for sharing the resulting intellectual property rights have been determined, and which is prepared in accordance with scientific principles to define every phase of R&D activities,
c) Ministry: The Ministry of Science, Industry, and Technology,
ç) Application document: The form submitted by the applicant to the General Directorate and/or submitted electronically for the purpose of receiving support, which includes a feasibility report as an attachment and whose content is updated by the General Directorate in line with emerging needs,
d) Large enterprise: Enterprises established in Turkey that do not qualify as SMEs,
e) Evaluation Committee: A committee chaired by the Director General or a Department Head designated by the Director General, established to determine the investment project to be supported, evaluate applications and proposed changes to the supported investment project, and make decisions; consisting of one member appointed by the Ministry from among university faculty members, one member from the Union of Chambers and Commodity Exchanges of Turkey (TOBB) or industrial organizations, and two members of Ministry staff specializing in R&D and innovation project management or investment—for a total of five regular members—as well as four alternate members, consisting of two Ministry staff members, one faculty member, and one TOBB sector representative,
f) General Directorate: The General Directorate of Science and Technology,
g) Non-repayable support: Cash support provided to businesses under the Technological Product Investment Support Program that is not subject to repayment,
ğ) Business: Units or ventures engaged in an economic activity that are owned by one or more natural or legal persons, regardless of their legal status,
h) SME: Businesses falling under the scope of the Regulation on the Definition, Characteristics, and Classification of Small and Medium-Sized Enterprises, which was enacted by Council of Ministers Decision No. 2005/9617 dated October 19, 2005,
ı) Small enterprise: Enterprises that include “micro-enterprises” as defined in the SME definition,
i) Technological product: A product created by a qualified workforce using scientific knowledge and technological research to meet societal needs and raise the standard of living, which is distinctly different from existing products and has high added value and competitiveness,
j) Technological product investment support program: A program that supports investment projects aimed at technological products resulting from R&D and innovation projects in the industrial sector,
k) Investment project: The entirety of activities aimed at the production of a technological product, with clearly defined and interrelated objectives, scope, targets, outputs, duration, budget, other resources, and implementers,
l) Investor: A natural or legal person who carries out the investment in a technological product resulting from R&D and innovation projects,
m) Innovation project: The process of transforming an idea into a marketable, new, or improved product, or into a new or improved method used in the production of goods and services; excluding simple changes consisting solely of differences in appearance—such as changes in color or decoration—and similar alterations that are entirely aesthetic in nature, as well as changes in the product’s structure, qualities, or performance from a technical standpoint;
.
SECTION TWO
Support Elements, Support Conditions, Application Form and Deadline,
Documents Required for Applications
Support Components
ARTICLE 4 – (1) Investments supported under the Technological Product Investment Support Program are eligible for the following non-repayable support elements:
a) Machinery and equipment support: Consists of support provided for expenditures constituting the investment project amount for the production of the technological product in question.
b) Loan interest support: This consists of interest support for investment loans taken out to cover expenditures constituting the investment project cost for the production of the technological product in question.
c) Operating expense support: This consists of support provided for expenses incurred during the operational phase of the production of the technological product in question.
Support Conditions
ARTICLE 5 – (1) An investor may benefit from the support elements only once for the investment in the technological product resulting from each successfully completed R&D and innovation project.
(2) Support is provided if the technological product subject to the investment is being produced domestically for the first time.
(3) Investments in the production of a technological product—whether resulting from R&D and innovation projects conducted abroad and supported by institutions, organizations, or funds in that country, or from R&D activities funded by the investor’s own resources and for which a patent has been obtained—are eligible for support if such production takes place in Turkey. There is no requirement for the applicant investor to be a citizen of the Republic of Turkey, and the documents to be requested from the investor are specified in the procedures and principles regarding the implementation of this Regulation.
(4) For businesses located in technology development zones established under the Technology Development Zones Law No. 4691 dated June 26, 2001, if the investment in a technological product resulting from R&D and innovation projects initiated and completed within the zoneand innovation projects initiated and completed within the zone, the investment in the resulting technological product within the zone is deemed eligible for support by the Technological Product Evaluation Commission to be established by the management company, or if a positive report is issued confirming that the product subject to the investment possesses the characteristics of a technological product, the investments to be made by the enterprises both within and outside the zone shall be considered eligible for support.
(5) If the natural or legal person who owns the R&D and innovation project is different from the investor legal entity, a notarized document establishing the rights of the parties regarding the R&D and innovation project must be submitted between the investor and the owner of the R&D and innovation project.
(6) In cases where the rights related to R&D and innovation projects—which were carried out entirely by large or medium-sized enterprises, successfully completed, and resulted in a technological product—are transferred to smaller-scale enterprises, the technological product in question shall be evaluated under the investment support framework applicable to large or medium-sized enterprises.
(7) Under this Regulation, the procedures for implementing support measures, priority technology areas, the criteria for granting support, and other matters shall be specified in the procedures and principles prepared by the Ministry.
(8) Large enterprises are not eligible for credit interest support.
Application Form and Deadline
ARTICLE 6 – (1) Under this Regulation, businesses wishing to make investments in Turkey related to technological products shall submit an application. Natural persons are required to establish a company and obtain legal personality prior to submitting an application.
(2) Applications are submitted to the General Directorate in writing and/or electronically, with the documents required by the Ministry provided by the person authorized to represent and bind the enterprise.
(3) Applications may be accepted once or more than once a year. Application dates are announced on the Ministry’s website.
Documents Required for Applications
ARTICLE 7 – (1) The documents required for the application, based on the project value of the investment to be made, are specified in the procedures and principles prepared by the Ministry regarding the implementation of this Regulation.
PART THREE
Preliminary Evaluation and Evaluation
Preliminary Evaluation
ARTICLE 8 – (1) The General Directorate shall conduct a preliminary evaluation of applications to verify the completeness and accuracy of the documents.
(2) It is essential that the information required in the documents submitted with the application be provided in full. Otherwise, the applicant will be requested to remedy the deficiencies within 15 business days. If the deficiencies are not remedied within the specified period, the application will be rejected, and the applicant will be notified in writing.
(3) Applications that comply with the provisions of the Regulation are submitted to the Evaluation Commission.
Evaluation
ARTICLE 9 – (1) Applications with no deficiencies are evaluated by the Evaluation Commission in terms of macroeconomic policies, supply/demand balance, sectoral impacts, potential for value creation, and financial and technical aspects.
(2) For applications submitted by businesses, the business class to be considered for support is determined by taking into account the types of businesses specified in the Regulation on the Definition, Characteristics, and Classification of Small and Medium-Sized Enterprises and is evaluated within the scope of the support.
(3) At least two staff members from the General Directorate are assigned to inspect the investment project on-site.
(4) The General Directorate may, when deemed necessary, seek opinions from relevant institutions, councils, and organizations, and may assign commission members to conduct on-site inspections.
(5) When deemed necessary, the General Directorate may have institutions, organizations, legal entities, or individuals related to the investment project conduct an on-site inspection and prepare a report.
(6) The reports shall also include recommendations regarding the investment items that should be supported within the investment project.
(7) Once all reports serving as the basis for the evaluation have been completed, an evaluation meeting is held on the date and at the time determined by the General Directorate.
(8) The General Director or a Department Head designated by the General Director participates in the evaluation meetings in the capacity of chairperson and presides over the meeting.
(9) The Evaluation Commission convenes with the participation of five members; in cases where a regular member is unable to attend the meeting, an alternate member participates.
(10) Decisions of the Commission are made by a vote of at least three members in favor.
(11) The Commission decides on whether to support the investment project, determines the investment items to be supported, and rules on requests for changes or the rejection of the investment project.
(12) Applications are evaluated and decided upon by the Evaluation Commission within a maximum of 85 business days. This period begins on the date the deficiencies in the application file are resolved, if any exist. For complete applications, the application date is taken into account.
(13) Applications deemed ineligible for support by the General Directorate, as well as those approved for support, are notified to the applicant in writing within 10 business days of the Evaluation Commission’s decision, with the reasons stated.
(14) The applicant is responsible for the existence and accuracy of the information and documents submitted; should the contrary be determined at any stage of the investment, the General Directorate has the authority to decide whether or not to exclude the applicant from the relevant support program.
(15) During the evaluation phase of investment projects to be supported, the Evaluation Commission takes into account the budget allocation set aside for this purpose in the Ministry’s budget.
(16) A copy of the Evaluation Commission’s decisions, as well as a copy of the contract signed with the business and its attached payment schedule, shall be sent by the General Directorate to the Ministry of Finance, General Directorate of Budget and Financial Control within 30 days of the contract’s signing, to ensure that the investment project’s budget allocation and expenditure status can be planned.
SECTION FOUR
Support Period, Machinery and Equipment Support, Loan Interest Support,
Operating Expense Support
Support Period
ARTICLE 10 – (1) For investment projects eligible for machinery and equipment support or loan interest support, the support period is 36 months, starting from the date the contract between the Ministry and the business is signed. If requests for changes are made and deemed appropriate by the General Directorate, an additional period of up to 6 months may be granted on a one-time basis.
Machinery and Equipment Support
ARTICLE 11 – (1) Non-repayable support is provided for expenditures constituting the investment project amount aimed at the production of the technological product in question, in the following amounts depending on the size of the business:
a) Small businesses are eligible for support of up to 40% of the investment project cost. This support amount may not exceed 5,000,000 TL.
b) For medium-sized enterprises, support is provided up to a maximum of 30% of the investment project cost. This support amount may not exceed 4,000,000 TL.
c) Large enterprises are eligible for support of up to 10% of the investment project cost. This support amount may not exceed 2,000,000 TL.
(2) The machinery and equipment to be purchased for the investment project must are identified by a domestic product certificate issued in accordance with the procedures and principles prepared by the Ministry under Article 63 of the Public Procurement Law No. 4734 dated January 4, 2002, an additional 10 points shall be added to the rates specified in the first paragraph.
(3) Support payments shall be made in Turkish Lira in accordance with the payment schedule specified in the contract.
(4) For payments to be made to supported businesses, the Turkish Lira equivalent of expenditures made in foreign currency shall be calculated based on the foreign exchange selling rate of the Central Bank of the Republic of Turkey on the date the expenditure was made.
(5) Payments are made to the bank account number opened in the name of the supported business at one of the public banks operating within the country, the details of which are specified in the contract.
(6) It is a condition that sales invoices for domestically purchased machinery and equipment, and for imported machinery and equipment, the approved customs entry declarations along with the sales invoices, be submitted, and that the installation of the machinery and equipment be completed.
Loan Interest Support
ARTICLE 12 – (1) Up to 50,000,000 TL of the investment project amount for the production of the technological product in question is eligible for support.
(2) An investor who completes the investment by utilizing the machinery and equipment support component may be eligible for the loan interest support component for the remaining portion of the investment project cost for the duration remaining based on the support period.
(3) For investment loans with a minimum one-year term obtained from financial institutions for the investment in the technological product, the Ministry shall cover the full amount of the interest rate—as announced annually by the Ministry—on the portion of the investment project amount up to 10,000,000 TL.
(4) For the portion of the investment project amount exceeding 10,000,000 TL, the investor is eligible for interest support equal to 50% of the rate announced by the Ministry.
(5) For each investment project, the total amount of support provided to businesses for machinery and equipment, plus the total amount of credit interest support and operating expense support, or the total credit interest support provided for the entire investment project amount, may not exceed 10,000,000 TL.
(6) Loan interest support does not apply to investments made through financial leasing companies.
(7) If the interest rates applied by intermediary institutions fall below the credit interest support rate, the rate applied by the intermediary institution shall be taken into account.
(8) For the purpose of implementing the interest support program, more than one intermediary institution may not be contracted for the same investment project.
(9) Credit interest support—including the maximum credit support limit, the credit support period, support rates, partner institutions/organizations, and other matters—shall be determined and implemented through protocols to be concluded between the Ministry and the intermediary institutions.
(10) Under the protocol to be concluded between the Ministry and the intermediary institution, the principal risk of the loan to be used by businesses is entirely borne by the intermediary institution. The intermediary institution evaluates loan applications in accordance with the provisions of the protocol and banking regulations. The Ministry is authorized to suspend the loan interest support program, provided it notifies the parties to the protocol 30 days in advance when deemed necessary.
(11) If the interest, profit share, or principal of the loans used is not repaid by the investor within the timeframes specified in the repayment schedules, the first missed payment shall be reported to the Ministry by the relevant intermediary institution as soon as possible; the Ministry shall then suspend interest support payments. If the relevant intermediary institution subsequently notifies the Ministry that the investor has fulfilled their loan repayment obligations, interest support payments for the periods following the notification shall resume on the originally scheduled payment dates without any extension. Should the loan repayment obligations be defaulted upon again, interest subsidy payments shall be terminated.
(12) The intermediary institution is obligated to ensure that the loan, which forms the basis for the interest subsidy, is used for the purposes specified in the contract. If it is determined that the loan has been used for purposes other than those specified, the amount determined by the intermediary institution—calculated by applying the interest or profit-sharing rate applied by the relevant intermediary institution to the loan in question to the interest support amount paid by the Ministry—must be deposited by the intermediary institution into the account of the Ministry’s Central Accounting Directorate within 5 business days to be recorded as revenue in the budget. Otherwise, the Ministry shall recover the said amounts by transferring funds from the intermediary institutions’ reserve accounts held at the Central Bank of the Republic of Turkey or by using other legal means.
(13) In the event the investment is canceled for any reason, the amount of interest support received on the loan shall be collected in accordance with general provisions.
Operating Expense Support
ARTICLE 13 – (1) Under the operating expense support program, small businesses that have completed their investment and received a completion certificate from the General Directorate may be granted non-repayable support for up to one year for the following operating period expense items, provided that the application is submitted before the completion of the first year of operations, based on the date of the certificate:
(2) For small businesses that have completed their investments, based on one or more of the following expense items:
a) Energy expenses: Up to 75% of the annual energy costs incurred for production purposes,
b) Personnel expenses: Up to 75% of the gross minimum wage applicable for the year for annually employed personnel,
c) Rent expenses: Up to 75% of the annual rent expenses,
support is provided.
(3) Businesses benefiting from operating expense support may employ one staff member to develop and coordinate public-university-industry collaboration efforts related to technology, R&D, and innovation projects—both domestic and international—pertaining to their production activities. The portion of this staff member’s salary equal to the gross minimum wage will be supported by the Ministry until December 31, 2023.
(4) Personnel to be employed for the purpose specified in the third paragraph must:
a) Hold at least a master’s degree,
b) Have at least 5 years of work experience in sectors compatible with the investment in question,
c) Possess knowledge and experience in areas such as university-industry collaboration, intellectual and industrial property rights, investment, government support programs, and cost-benefit analysis,
are required.
(5) The Ministry will make payments to the investor eligible for operating expense support after the investor submits invoices or documents serving as invoices for each specified expense item.
(6) Small businesses eligible for operating expense support are determined by the Evaluation Commission.
SECTION FIVE
Expenditure Items Constituting the Investment Project Amount, Expenditures Not Supported
Expenditures, and Other Sources Supporting the Investment
Expenditure Items Constituting the Investment Project Amount
ARTICLE 14 – (1) The investment project amount to be used as the basis for non-repayable support to be provided based on the investment project amount for the technological product in question shall be determined as follows:
a) The cost of the feasibility study to be prepared for the investment project,
b) Costs of main machinery and equipment,
c) Costs of auxiliary machinery and equipment,
ç) Costs for the transportation and insurance of machinery and equipment,
d) Installation costs,
make up the total.
Ineligible Expenses
ARTICLE 15 – (1) Completed investments and investment expenditures incurred prior to the application date are not eligible for support.
(2) Investments involving second-hand or used machinery and equipment are not eligible for support.
(3) In investment projects targeting technological products, the following expense items are not eligible for support:
a) Land costs,
b) Land development costs,
c) Building and construction costs,
d) Transportation costs,
d) Vehicle expenses,
e) General expenses such as management, lighting, ventilation, and heating,
f) Unexpected expenses,
g) Interest expenses during the start-up period,
ğ) Interest expenses during the operating period,
h) Depreciation,
ı) Maintenance and repair expenses,
i) Start-up expenses,
j) Raw materials, intermediate goods, and operating supplies,
and similar expenses.
Other Sources of Support for the Investment
ARTICLE 16 – (1) Businesses receiving support under this Regulation may also benefit from other forms of support, such as exemptions, exceptions, and tax credits provided under other legislation.
(2) Non-repayable support provided from public sources for the investment in a technological product shall be specified in the application documents. Non-repayable support provided from such sources shall be deducted from the amount of non-repayable support to be granted by our Ministry.
SECTION SIX
Contract, Requests for Amendments, and Force Majeure
Contract
ARTICLE 17 – (1) The contract entered into between the investor of the technological product deemed eligible for support under this Regulation and the Ministry shall include:
a) The purpose and scope of the contract,
b) The parties to the contract,
c) Information regarding the parties,
ç) The rates and duration of support to be provided by the Ministry,
d) The expenditure items covered by the support,
e) The total amount of support to be provided,
f) Provisions regarding the repayment of support in the event of its cancellation,
g) Provisions regarding other administrative and financial matters, as well as other relevant issues,
ğ) The business plan and letter of commitment regarding the investments to be made as outlined in the contract annex, as well as other documents to be requested by the General Directorate,
are included.
Requests for Changes and Force Majeure
ARTICLE 18 – (1) The business operator may submit a request regarding matters set forth in the contract, the narrowing or expansion of the scope of the investment, changes in machinery and equipment not foreseen in the investment project, changes in the personnel to be employed at the facility, and changes in the facility’s legal status, shall submit a substantiated request to the General Directorate.
(2) Requests for changes shall be reviewed by the Evaluation Commission and decided upon within 30 business days from the date of notification.
(3) The Evaluation Commission shall issue the final decision regarding investments found, as a result of an on-site inspection conducted by the General Directorate, not to be carried out in accordance with the intended purpose and work program. If a decision is made to exclude the investment from the scope of support, payments made by the Ministry shall be recovered in accordance with Article 20.
(4) Requests for changes to the investment due to force majeure events—such as earthquakes, floods, hurricanes, general strikes, and riots; mobilization; terrorism; a state of war; widespread and contagious diseases; or major economic crises—must be submitted in writing by the business representative to the General Directorate. In such cases, payments may be deferred or canceled by the General Directorate.
SEVENTH SECTION
Transfer, Sale, Export, and Leasing; Administrative Sanctions; and Termination of the Investment
Transfer, Sale, Export, and Leasing
ARTICLE 19 – (1) Machinery and equipment acquired through the technological product investment support program may not be sold for a period of 5 years from the date the Ministry’s support is paid; may not be leased to any other person, institution, or organization under any circumstances, the right to use them may not be transferred under any name or form, they may not be pledged as collateral, and in the event of the imposition of a provisional measure, provisional attachment, or attachment, the situation must be reported in writing to the Ministry within 7 days along with all relevant documents.
Administrative Sanctions
ARTICLE 20 – (1) Any person who acts in violation of the provisions set forth in this Regulation and its implementing procedures and principles; fails to fulfill the obligations specified in the contract; issues or uses forged or misleading documents; provides false or misleading information; sell or cause the sale of machinery and equipment obtained through the technological product investment support program—including through enforcement or bankruptcy proceedings—prior to the prescribed timeframes, or fail to complete investments within the prescribed timeframe, the support provided to businesses shall be pursued and collected from the investor in accordance with general provisions.
Completion of the Investment
ARTICLE 21 – (1) An enterprise that has completed its investment shall prepare and submit to the General Directorate a final report whose content is determined by the General Directorate.
(2) In accordance with the Final Report, at least two personnel from the General Directorate shall be assigned to inspect the investment on-site and to issue the investment completion certificate, the content of which is determined by the General Directorate.
(3) Starting from the date production of the technological product subject to the investment begins, businesses shall submit to the General Directorate, on an annual basis for a period of 5 years, a progress report—whose content is determined by the General Directorate—containing sales information and developments regarding the product for which investment support was provided.
CHAPTER EIGHT
Miscellaneous and Final Provisions
Payments
ARTICLE 22 – (1) Payments to be made under the second and third paragraphs to faculty members of higher education institutions appointed as members of the Evaluation Commission or for monitoring and oversight purposes, as well as to sector representatives of the Union of Chambers and Commodity Exchanges of Turkey or personnel of industrial institutions and organizations, shall be covered from the Ministry’s budget.
(2) Faculty members of higher education institutions who are to perform monitoring and oversight duties at evaluation meetings shall be appointed in accordance with Article 38 of the Higher Education Law No. 2547.
(3) Travel allowances for faculty members and industry representatives assigned to these meetings shall be paid in accordance with the provisions of the Travel Allowance Law No. 6245 dated February 10, 1954.
(4) Matters concerning payments to be made for support components under this Regulation are specified in the procedures and principles prepared by the Ministry regarding implementation.
Monitoring and Oversight Authority
ARTICLE 23 – (1) The Ministry is authorized to conduct or have conducted on-site inspections of the investment, as deemed necessary. The Ministry may have faculty members of higher education institutions and personnel of industrial institutions and organizations carry out the monitoring and supervision related to the on-site inspection of the investment.
(2) The Ministry shall:
a) Determine the methodology for implementation and issue instructions;
b) take necessary measures and make regulations in this regard, taking into account macroeconomic policies and evolving conditions,
c) is authorized to inspect compliance with the conditions stipulated in the contract and to take necessary measures based on the results of such inspections,
is authorized to do so.
(3) During monitoring and inspection, requests by monitoring and inspection officials to review any information and documents related to the investment shall be met; upon request, certified copies of the documents shall be provided, and on-site inspection shall be permitted.
(4) The Ministry may request any information, documents, and opinions deemed necessary from relevant individuals, institutions, and organizations for the implementation of this Regulation.
Confidentiality
ARTICLE 24 – (1) Information and documents provided to persons involved in the evaluation, monitoring, and audit processes of applications for the technological product investment support program shall be considered trade secrets or confidential information specific to the service and shall not be disclosed to third parties by any means.
Entry into Force
ARTICLE 25 – (1) This Regulation enters into force on the date of its publication.
Implementation
ARTICLE 26 – (1) The Minister of Science, Industry, and Technology shall be responsible for the implementation of the provisions of this Regulation.