The Technopark Exemption Does Not Cover All Your Income: Where the Line Begins

The sentence I hear most often from companies that move into a technopark is: “We don’t pay corporate tax any more.” That sentence is as dangerous as it is true — because what causes problems in an audit is not what the exemption covers, but what it does not.

I have been at this desk since 2003. Almost every problem I see in technopark files comes not from the existence of the exemption but from the fact that nobody drew its boundary at the outset. This article draws that boundary.

What the exemption depends on: activity and place

Provisional article 2 of Law No. 4691 exempts income that taxpayers operating in a zone derive exclusively from software, design and R&D activities in that zone from income and corporate tax until 31 December 2028.

There are two conditions inside that sentence and both are required together:

The nature of the activity. It must be software, design or R&D. Being a technology company is not enough; the work generating the income has to fall into one of those three categories.

The place of the activity. The work has to have been carried out in the zone. Income from software developed outside the zone and invoiced from inside it does not fall within the exemption.

Any planning that does not read those two conditions together produces a structure that is expensive to correct later.

Three groups that fall outside

The out-of-scope items I see in practice fall under three headings.

Non-operating income. FX gains, deposit interest, securities income, rental income. These are income of the company but not income arising from software activity in the zone. In a company selling software abroad and holding foreign currency, FX gains can reach significant amounts — and that amount is outside the exemption.

Out-of-scope services. Training, installation, consultancy and maintenance-support delivered by the same team. Some of these can be treated as an inseparable part of the software, some cannot. The distinction is drawn by looking at how the contract and the invoice were constructed; invoicing everything as a single line saying “software” does not remove the distinction, it just makes you an easy target in an audit.

Activity outside the zone. Work carried out at the company’s head office, output produced at a branch outside the zone, subcontracted development. Personnel working outside the zone under the remote work permission are the exception — but that too is subject to its own rules and ratios, which I cover in the remote work article.

Separate accounting: the exemption’s weakest link

To calculate the exempt income, the revenue, costs and expenses of in-scope and out-of-scope activity have to be tracked separately. This looks like a question of accounting technique but it is actually what determines whether the exemption stands.

In practice the item that generates most argument is shared costs: general administration, rent, depreciation, shared personnel. When you are asked which key was used to allocate these between in-scope and out-of-scope, the answer has to be consistent and documentable. Revenue ratio, headcount, time spent — whichever you use, do not change it from year to year, and keep the reasoning in writing.

Where the separation does not exist, what happens in an audit is this: it is not the exemption that is challenged but its calculability. And an exemption that cannot be calculated cannot be defended.

A further limit on intangible income

For income arising from intangible rights tied to a patent or a functionally equivalent certificate, the exemption does not apply automatically in full. The portion that benefits is calculated using the ratio of qualified expenditure to total expenditure.

This is a limitation most companies do not build in at the outset, and it deserves its own article: the qualified expenditure ratio.

It is an exemption, not an immunity

The choice of word matters. What exists in a technopark is an exemption — income arises, is declared, and is deducted from the base on the return. It is not an immunity. That has three practical consequences.

First, the filing obligation continues. Second, a venture capital fund obligation can arise on the exempt income. Third, the domestic minimum corporate tax discussion comes into play — where a floor is computed on income before deductions and exemptions, “we pay no tax at all” is not accurate for every company.

The first three questions in an audit

When a technopark file is examined, the sequence usually runs like this:

1. Where was the activity generating the income actually carried out? Personnel entry and exit records, project files, notifications made to the zone management company.
2. Is the activity in scope? The contract, the invoice description, the output delivered, the project definition.
3. How was the in-scope/out-of-scope separation made? Accounting records, the cost allocation key, the certification report.

In a company that answers all three consistently, the exemption is an advantage. In a company that cannot answer even one, the exemption is a retrospective risk item.

In short

The technopark exemption covers the activity, not the company. Income from software, design and R&D carried out in the zone is exempt; everything else falls under the normal regime. If you built that separation into your accounting from day one, the exemption adds to your value; if you did not, it sits there as a liability whose eventual owner is undetermined.

To assess your own position you can book a 30-minute intro call.

Sources

• Law No. 4691 on Technology Development Zones, provisional article 2 — Legislation Information System
• Technology Development Zones Implementation Regulation — Legislation Information System
• Council of Ministers Decision No. 2017/10821 on the qualified expenditure ratio for intangible income — Official Gazette
• Advance rulings on the subject — Turkish Revenue Administration ruling database

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This article reflects 2026 legislation and is provided for general information only; it is not legal or tax advice. Legislation can change — verify the current rules and your own position with a licensed professional before acting.