# Fiscal and Tax Incentives for Gaming Companies in Turkey ## **Fiscal and Tax Incentives for Gaming Companies in Turkey** # Tax Advantages and Incentives for Game Developer Companies In this article, we will discuss these incentives and provide a comprehensive guide that all game entrepreneurs can utilize. Based on solid know-how and extensive experience, this post offers practical, bite-sized information rather than just theoretical insights. If you can’t find an answer tailored to your game venture, simply send your question via email. --- ## 1\. Timing and Legal Infrastructure for Company Formation **Should We Establish a Company? How Should We Legally Structure It?** If you’ve started your product development and have at least two partners, it’s advisable to incorporate your business during the early or middle stages. For those considering future investments, forming a joint-stock company becomes almost a tax necessity. However, if you’re a sole entrepreneur, you might postpone formal company establishment until after your product’s market launch. **Key Information:** * **Domestic Company vs. Foreign Setup:** Due to state supports, it is financially impractical to establish your company abroad. Many foreign firms publish their games via their Turkish companies to take advantage of local incentives. If you anticipate attracting foreign investment or are uncertain about the legal system, consider forming a main company abroad that owns 100% of your Turkish entity. Handling the “flip-up” process early on is tax-wise beneficial. * **Acquiring a Dormant Company:** If you plan to initiate advertising within six months, acquiring a dormant company instead of forming a new one may provide a cash advantage of up to 70% in grants. * **Multiple Partners:** When establishing a company with multiple partners, a formal Shareholders Agreement (SHA) is essential to document all arrangements. Additionally, including employee stock options in the company charter can motivate your team. * **NACE Code 62.01:** Registering under this code opens up numerous government supports. --- ## 2\. Location Selection: Techno Park, Free Zone, and Beyond In Turkey, despite high tax and social security costs, technology companies can benefit from many tax incentives if they set up in locations like techno parks, free zones, or even Tekmer centers. **Considerations:** * **For Smaller or Early-Stage Companies:** If you do not expect significant profits in the first year and your team is fewer than five, the additional obligations of these centers (rent, reporting, and project management) might be more of a burden than a benefit. Although incubators offer low costs, they may impose long-term equity obligations that could be disadvantageous. * **For Rapid Growth:** If you anticipate growing quickly (reaching 5–10 employees within six months), consider these locations. You might initially set up in a techno park or free zone, or establish your company and then open a branch there. * **Additional Resources:** For a detailed comparison between these options, please refer to this [comparison link](https://docs.google.com/spreadsheets/d/1Cgz3Kz7_7RsivLwMH3dT28uAkUr0LPk3Bi75yUwIxeE/edit?gid=0#gid=0). > *Note:* R&D design centers are generally not suitable for game ventures due to their internal bureaucracy and stringent requirements. --- ## 3\. Taxation of Expenses **Have We Started Spending? Are We Paying Both Service Providers and the Government?** The game and mobile application sectors are heavily import-dependent. Expenses include payments to advertising networks, servers, and various software licenses (e.g., Unity, Atlassian, Figma, etc.). Unfortunately, the state often tries to capture taxes from these expenditures through startups. **Key Expense Consideration:** * **Advertising:** Advertising expenses are critical. Since ads targeted at foreign markets (assuming your games are available on platforms like Steam, App Store, or Play Store) are considered services rendered abroad, no VAT2 or withholding tax applies. Overpaying in taxes may signal excessive state compliance, but it can severely limit your growth. Many tax advisors, unfortunately, misguide companies regarding this issue. * **Software Licensing:** Some software used in product development might require VAT2 payments. Whether this applies depends on your tax advisor’s expertise. Working with an experienced professional in this area is highly recommended. --- ## 4\. Cash Reimbursements from Government Support (Incentives) **How Do We Finance Our Expenses with Government Support?** While TUBITAK and KOSGEB rarely accept game projects as innovations, if you are developing game technology or an underlying infrastructure, you may qualify for programs like TUBITAK 1507 (for smaller ventures) or 1501 (for larger companies). However, chasing support for the sake of it can divert your focus from core growth. **For Self-Publishing:** The Ministry of Commerce offers impressive support for self-publishing ventures. You can receive cash reimbursements for: * Up to 60–70% of your advertising expenses, * 50% of commissions from platforms like App Store, Play Store, or Steam, * 60% of the costs for essential tools such as Adjust, AppsFlyer, SensorTower, Mobile Action, Adapty, etc. Currently, the state provides up to 12.5 million Turkish Lira per game in advertising and commission support, along with significant reimbursements for engineer salaries and software tools. --- ## 5\. Taxation of Revenues and Benefits of Exemptions **Not in a Techno Park? How Can We Benefit from Reduced Corporate Tax?** Even if your software exporting company is not based in a techno park or an exempt area, you can still benefit from an 80% corporate tax exemption. Moreover, because these companies perform service exports, the corporate tax rate applied is 20% instead of the standard 25%. In effect, this results in a 16% tax rate reduction (20% \* 80%). **Applicability:** * **Revenue Types:** This benefit is applicable to in-app purchase and subscription revenues but not to advertising revenues. Furthermore, since your sales are made abroad, VAT is not applicable. Thus, even a one-person company earning solely from in-app purchases can secure significant tax advantages without the need to be in a techno park. --- ## Conclusion If you have any questions or need further clarification for your game venture, feel free to reach out via email. info@ozmconsultancy.com ![](https://cdn.hashnode.com/res/hashnode/image/upload/v1742277707641/e8b04cc9-87e3-49eb-9069-3b18b45782ca.png align="center") ---