Two lines with different fates
The annual Turkish corporate income tax return, kurumlar vergisi (KV), mixes deductions that live for one year with deductions that can wait. Confusing them is expensive.
Donations and aid, bağış ve yardım, reduce only the current year profit. If no profit remains after that line, the unused amount is lost. There is no carry forward.
The R&D and design deduction, Ar-Ge ve tasarım indirimi, under Articles 3 and 3/A of Law 5746 works differently. The unused amount carries forward with no time cap and is increased each year by the revaluation rate, yeniden değerleme oranı. That line is patient.
How the return is built
The line order on the KV return is fixed:
- add non-deductible expenses, KKEG, back to book profit;
- then subtract exemptions that apply even at a loss;
- then offset prior year losses;
- and only then the profit-conditioned deductions: R&D, sponsorship, donations, the interest deduction for cash capital increases, and the investment allowance.
The last group follows one rule: no profit left at that line, no deduction. Inside Article 10 of the Corporate Tax Law, KVK, the order of deductions is set by the article itself. The taxpayer chooses nothing there.
Where the dispute starts
Law 6728 of 2016 removed R&D from KVK Article 10. The deduction now lives only in Law 5746, which contains no ordering rule against donations. A question appeared that did not exist before: if the same year has both a donation and R&D, and profit covers only one, which line goes first.
If R&D goes first, the donation burns, because it cannot be carried forward. If the donation goes first, R&D simply carries forward and is revalued. The arithmetic is obvious. The form says otherwise.
The tax office view
Gelir İdaresi, the Turkish Revenue Administration, in its February 2026 guide "Vergi Mevzuatı Yönünden Bağış ve Yardımlar" and in the return layout itself, orders the lines as follows: risturn rebates, then R&D, then design, then sponsorship, and donations only if profit still remains. On the form, the patient line goes first and the one-year line burns.
The court view
Danıştay, the Council of State, ruled differently in three final judgments:
- 4th Chamber, 21.02.2023, E:2022/1600, K:2023/867;
- 3rd Chamber, 28.02.2025, E:2023/6396, K:2025/982;
- 9th Chamber, 29.04.2025, E:2023/4916, K:2025/1692.
In all three, the order is donations first, then R&D. The courts\u0027 logic is simple. A carry-forward deduction loses nothing by waiting, while a donation loses everything, so the order should preserve what would otherwise vanish.
What this means in practice
Follow the GİB form and the donation can burn. Put the donation first and the deduction survives, while R&D is parked for later years with indexation. But the second route is a documented risk position: the form is drawn differently, and an assessment can follow. This is not a free election the tax office must accept.
FAQ
Can an unused donation be carried forward
No. Bağış ve yardım works only against current year profit. The unused remainder is lost.
What happens to unused R&D deduction
It carries forward with no time limit and is increased each year by the revaluation rate.
Who decides which line goes first
The return form is drawn by GİB, and on the form R&D comes first. Three final Danıştay judgments put donations first. The conflict is live, and choosing the order is a risk position, not a spreadsheet setting.
Our house view: do not set this line as the spreadsheet prefers. Either file exactly as the form is drawn and accept the assessment risk, or put donations first and keep the three judgments as written support in the file. The decision is made before filing, not after the inspector asks.
This material is informational and is not individual advice.