Expenses within the scope of R&D and innovation activities are capitalized in “263- Research and Development Expenses Account” and if a value that needs to be capitalized as an intangible right is reached as a result of R&D activities, regardless of whether it can be registered or not, the capitalized expenses in question must be amortized through depreciation.
In cases where no economic value arises due to the project not being completed or the project failing, the amounts capitalized in previous years can be directly recorded as expenses in the accounting period in which the project fails.
While the R&D expenses followed in the “263- Research and Development Expenses” account of taxpayers seen in their balance sheets at the end of the 2023 accounting period and in the following periods are subject to inflation adjustment, the adjustment process will be made by taking into account the end of the month in which the expense related to each month was realized.
On the other hand, in cases where no economic value arises due to the project not being completed or the project failing, the amounts capitalized in previous years will be considered as direct expenses in the accounting period in which the project fails, and therefore the part of the said expense related to the inflation adjustment made as of the end of the 2023 accounting period should not be considered as expenses.
Source: Tax Procedure Law Circular No. 165
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