Pharmaceutical Promotional Expenses Under the Corporate Tax Law

Definition of Pharmaceutical Promotion

The definition of pharmaceutical promotions carried out by pharmaceutical companies is regulated under the Regulation on Promotional Activities of Human Medicinal Products (“Regulation”), enacted pursuant to the Law No. 1262 on Pharmaceutical and Medical Preparations. Accordingly, pursuant to Article 4 of the Regulation, pharmaceutical promotion is defined as all informational activities to be carried out by authorization/license holders, or with the name, request, contribution, or support of authorization/license holders, regarding the medical-scientific characteristics of products to healthcare professionals; including the activities of product promotion representatives, advertisements in medical and professional books and journals, announcements made through direct mailing or other communication tools, scientific meetings and product promotion meetings, and similar activities. Furthermore, Article 5 of the Regulation regulates the scope of pharmaceutical promotional activities. Indeed, it is stipulated that the products covered under the Regulation shall include promotional activities directed at physicians, dentists, and pharmacists. Accordingly, promotional activities directed at healthcare professionals are carried out:

• using promotional materials directed at physicians, dentists, and pharmacists, 
• by organizing or supporting scientific meetings and product promotion meetings, 
• through visits made by product promotion representatives to physicians, dentists, and pharmacists. 

Deductibility as Expense

An expense is essentially defined as decreases in the assets or increases in the liabilities of an enterprise arising from deliveries of goods or production, use of services, or other transactions related to the principal business activity during a specific period.

Furthermore, pursuant to Article 40/1 of the Income Tax Law No. 193 (“ITL”), general expenses incurred for the generation and maintenance of commercial income are among the deductible expenses in the determination of net income. In addition, the provision lists the deductible expenses in determining net income. Moreover, while Article 8/1 of the CTL regulates the expenses deductible from corporate income by corporate taxpayers, Article 11 of the CTL sets forth the non-deductible expenses in the determination of corporate income.

Therefore, for an expense to be deducted from revenues in determining the net amount of period income, (i) a causal link must exist between the expense and the generation or maintenance of income, and (ii) the expense must be incurred for the generation of income.[1]

Pharmaceutical Promotional Expenses

Based on the explanations above, as a rule, for any expenditure made by pharmaceutical companies to be taken into consideration as an expense, such expenditure must have been incurred within the scope of the company’s activities.

Although pharmaceutical promotional expenses may appear to fall within the activities of pharmaceutical companies, these expenses shall not be always accepted as deductible expenses. At this point, assessing judicial decisions shall be important in determining to what extent pharmaceutical promotional expenses may be considered as deductible expenses.

Decisions of the Council of State and Regional Administrative Courts Regarding Pharmaceutical Promotional Expenses

Whether pharmaceutical promotional expenses in the pharmaceutical sector may be considered as deductible expenses has long been controversial, and there is no uniform approach in judicial decisions:

1- The Decision of the 3rd Chamber of the Council of State dated 19.09.2025 and numbered Case No: 2023/8876, Decision No: 2025/3360

In the incident subject to this Decision[2], transportation, accommodation, and registration expenses of doctors and company employees attending scientifically themed congresses and symposiums were deducted from corporate income by the company engaged in pharmaceutical marketing activities, and the relevant value added taxes were also treated as deductible. The defendant administration, on the other hand, considered such expenses as non-deductible expenses (“NDE”) on the grounds that they could not be evaluated within the scope of the company’s activities, and accordingly made corporate tax and provisional tax assessments.

The court of first instance stated that considering the functioning of the pharmaceutical sector, congress and symposium expenses were in the nature of advertisement, promotion, and publicity expenses and that such expenses were necessary for the continuation of commercial activities. The Court further stated that participation expenses of healthcare professionals in scientific meetings could be supported under certain conditions within the scope of the Regulation. Since there was no determination indicating any violation of the provisions of the Regulation in the concrete case, it was decided to annul the disputed assessment.

The Regional Administrative Court, however, evaluated that scientific congresses were not organized directly for the purpose of pharmaceutical promotion but were scientific meetings bringing together professionals in a specific medical field. In this respect, it concluded that such expenses were not directly related to the generation and maintenance of commercial income and found the corporate tax and value added tax assessments lawful. Nevertheless, the provisional tax was cancelled on the grounds that provisional tax for which the offset period had expired could not be sought.

In its decision, the Council of State stated that in addition to expenses being incurred for the purpose of generating and maintaining commercial income, a causal link between the expense and the commercial activity must also exist. In this respect, the Council of State particularly considers the following issues:

• Promotional Regime in the Pharmaceutical Sector: Pursuant to the Regulation, promotion of pharmaceuticals to the public is prohibited and promotion is permitted only to healthcare professionals. Therefore, scientific meetings and product promotion meetings were considered among the principal promotional tools in the sector. 
• Causal Link Between the Expenses and the Activity: It was stated that congress and symposium expenses were in the nature of advertisement, promotion, and publicity expenses, and that company employees attended such meetings to promote products, follow scientific developments, and obtain professional knowledge. Therefore, it was concluded that a causal link existed between the relevant expenses and the company’s activities. 
• No Violation of the Conditions under the Regulation: It was emphasized that the administration had not established any determination indicating a violation of the conditions set forth under the relevant Regulation. 

Based on the grounds, the Council of State concluded that there was no compliance with law in the corporate tax assessments made by considering congress and        expenses as NDE and rendered a reversal decision in favor of the pharmaceutical company.

2- The Decision of the 1st Tax Litigation Chamber of the Istanbul Regional Administrative Court dated 30.01.2023 and numbered Case No: 2022/2522, Decision No: 2023/176

In the incident subject to this Decision[3], the tax inspection report issued regarding the plaintiff pharmaceutical company alleged that certain expenses related to medical congresses attended or organized by the plaintiff should be removed from costs on the grounds that they constituted NDE.

The court of first instance evaluated that medical congresses were directly related to marketing and sales activities for pharmaceutical companies. The Court stated that such expenses fell within the scope of general expenses incurred for the generation and maintenance of commercial income and that the provisions of the Regulation merely regulated the procedures and principles regarding the conduct of such activities. On these grounds, the case file was accepted.

In its assessment regarding congress expenses, the Regional Administrative Court particularly considered the following issues:

• Nature of Scientific Meetings: The Regional Administrative Court stated that the relevant organizations were not organized entirely for the purpose of pharmaceutical promotion but were scientific meetings bringing together professionals regarding certain medical subjects. Therefore, it concluded that the expenses could not be directly associated with pharmaceutical promotion. 
• Participation of Company Employees: It was stated that the persons who may be sent to scientific meetings within the scope of the Regulation are healthcare professionals and that company employees could not be considered within this scope. Therefore, no unlawfulness was found in the non-acceptance of congress expenses incurred for company employees. 

Based on the grounds, the Regional Administrative Court annulled the decision of the court of first instance and dismissed the case.

Conclusion

In recent judicial decisions, whether congress and symposium expenses incurred in the pharmaceutical sector may be taken into consideration has been assessed within the scope of the characteristics of the concrete case, the functioning of the sector, and the relevant legislative provisions. While the decisions acknowledge that scientific meetings constitute an important promotional tool in the pharmaceutical sector and that certain expenses incurred within this scope may be considered advertisement, promotion, and publicity expenses incurred for the generation and maintenance of commercial income, in some cases it is concluded that scientific meetings do not directly serve the purpose of product promotion and therefore expenses for which a sufficient causal link with the activity cannot be established may be considered as NDE.