Turkey: Transfer Pricing Regulations in Turkey

Last Updated: 28 October 2010
Article by Metin Duran, YMM

In Turkey, the transfer pricing requirements has been stated under the Article 13 of Corporate Tax Law with the heading of "disguised profit distribution via transfer pricing". The General Communiqué on disguised profit distribution via Transfer Pricing, dated November 18, 2007 and a government decree dated December 6 determines details about implementation.

I. Methods can be used for determining arm's length price:

The article 13 of the Corporate Tax Law (CTL) states that for determining arm's length price taxpayers should use the most appropriate method according to characteristic of the transaction. The article 13 states that traditional methods and unspecified methods can be used for determining transfer prices.

On the other hand the general communiqué states that, tax payers should use the most appropriate method (best method) in the nature of the transaction. If it is not possible to reach an arm's length price by using traditional methods (CUP, RPM and CPLM) taxpayers can use other methods, such as profit split method or transactional net margin method. However it is still not possible to reach arm's length price by using transactional profit methods, taxpayers can used unspecified methods.

The methods are defined the article 13 of corporate tax law and the other regulations are:

a. traditional methods:

  • Comparable Uncontrolled method,
  • Cost Plus method
  • Resale Price method

b. Transactional profit methods

  • Profit split method,
  • Transactional net margin method
  • Unspecified methods

II. Related Parties:

Turkish CTL determines very broad definition of related person. There is not a minimum requirement of share for a related party for transfer pricing. The people are written below considered as related person.

Related Party: According to Corporate Tax Law; Companies' own shareholders, individuals or companies which are related with companies or its shareholders, individuals or shareholders that the companies are directly or indirectly dependent or that are controlled by companies, via management, auditing/supervision or capital, spouses of shareholders, lineal ancestors of shareholders and relatives ( including third degree).

According to Income Tax Law; spouses of the shareholders of the enterprises, lineal ancestors of shareholders and relatives (including third degree) and individuals or shareholders that the companies are directly or indirectly dependent or that are controlled by companies, via management, auditing/supervision or capital are considered as related party.

Both for income tax or corporate taxpayers, all transactions carried out with the persons resident in the countries or the regions which are announced as causing unfair tax competition by the Council of Ministers treated as the transaction carried out with the related persons.

III- Documentation Requirements

The obligation to generate a transfer pricing documentation is statutory determined. With the new rules, tax payers are obliged to fill a form attached to their annual corporate tax returns. In this form, taxpayers are required to present all the intra-group transactions within a year and the selected transfer pricing methods.

In addition, until the end of corporate tax return declaration date, Big Taxpayers Tax Office Taxpayers must issue annual report listing the international and domestic transactions which are the sales or purchases of goods or services to/from related parties during the calendar year and also must be ready to present information and documents with the report.

Corporate taxpayers other than the ones registered to Big Taxpayers Tax Office are liable to prepare this annual report listing only the international transactions with related parties.

Income taxpayers don't have to prepare the transfer pricing report but they have to prepare documentation for their domestic and international controlled transactions. The communiqué rules also set forth details of what information is to be included in the transfer pricing documentation.

The required minimum documentation elements are;

  • Description of activities of the company, Organizational structure, definition of the related parties (i.e. tax id number, addresses, phone number etc.) and ownership information of these parties,
  • All functions are performed and risks taken,
  • pricing lists of the products of the year
  • Cost of goods,
  • the amount and invoice information about all transactions with related and unrelated parties within the year,
  • All agreements are signed with the related parties,
  • financial tables of related parties,
  • intra-group pricing policies,
  • intra-group accounting standards and policy differences if exist,
  • ownership of intangible assets,
  • Transfer pricing method selected by the company (comparability analysis, selected comparables whether external or internal).
  • All kind of calculations and assumption for reaching arms length price
  • All kind of calculations for reaching the arms length range , if exist,

The law does not require a deadline for documentation but the government decree and the general communiqué states that documentation should be prepared by tax return submission date, and it should be submitted to the tax authorities upon their request.

The decree and general communiqué state that if the documents prepared in foreign language their Turkish translations also have to be submitted to the tax authorities.

V- Advance Price Agreements (APA ):

According to CTL article 13, corporate taxpayers can apply to the Ministry of Finance for and APA for determining of the method. If taxpayers and Ministry of Finance reach and APA, this can not be used more than three years.

The Government Decree and the General Communiqué about transfer pricing sets details for APA procedures. According to the decree and the general communiqué the scope of an APA is all corporate tax payers. Tax payers can apply bilateral or multilateral APA

Big Taxpayers Tax Office taxpayers can apply to the tax administration beginning on 1 January 2008 and other corporate tax payers can apply to the tax administration beginning on 1 January 2009 with respect to the appropriate method determined relative to a controlled international transaction. Companies registered with the Big Taxpayers Tax Office are typically the largest companies determined by reference to their turnover, payable taxes, and asset size. In addition, Bilateral or Multilateral APA is accepted by tax authority. The method determined between administration and the taxpayer becomes definite within the conditions and period determined under the agreement with no more than three years after the date of signing APA.

  • Steps of APA Procedures:

pre review of the application:

the APA application are subject to a pre review, Tax administration review the application for determining if the application are in line with the regulations and if any necessary document is missing or not. And if the administration thinks that the additional documents are necessary tax payers have to submit the missing documents. The pre review doesn't mean that the administration accepted the application.


After all necessary documents are submitted, tax administration evaluates the comparables, assets used, adjustments, methods and other requirements and conditions.

the Acceptation or Rejection of Application:

After performing all analyses the administration can accept with or without requiring any changes, or reject the application. If the application is accepted an agreement is signed between the taxpayer and the tax administration.

The period of the APA can not be longer than 3 years and it is valid only after signing the agreement.

During the period of the APA taxpayers and the administration can discuss any time about the execution of the APA.

The existence of the APA between the tax-payer and the Administration does not mean that the tax-payer will not be subject to tax scrutiny about the matter of arrangement. Although, the method determined in the arrangement could not be subject to criticism, the application of the method, and the satisfying of the conditions stated in the APA can be subject to tax scrutiny.

Renewal of APA.

Taxpayers can apply for renewing the APA. If the taxpayers want to renew the APA, he has to apply at least nine months before the ending day of the agreement. The tax payer should submit the necessary information and documents stating that the transactions covered in the APA are in line with the Arms Length Principle. On the other hand, if there is a change in the conditions and assumptions of the existing APA and if there is a need for amendment after the renewal, the tax-payer is responsible to state these issues at the application to the Administration

After the evaluation of the application for renewal, if the administration decides upon that the conditions and assumptions stated in the existing APA is still continuing and the determined method fulfills the Arms Length Principle, administration could accept the continuation of the former APA for one more period. On the contrary, if the Administration decides upon that the conditions and assumptions have changed and there is a need for the determination of a new method, the tax-payer should apply for a new APA

Revise the APA.

An existing APA between the Administration and the tax-payer is revised under the circumstances listed below:

  • If a critical assumption which took place in the APA is unrealized.
  • Occurrence of a material change in the arrangement conditions and discontinuance in the validity of the conditions stated in the APA
  • Changes in laws and regulations, including Double Taxation Avoidance Treaties, which will affect the APA
  • In bilateral or multilateral APAs, the revision, abolition or cancellation of the arrangements by the administrations of other countries.

The conditions for the revision of an APA can be determined by the Administration. If the parties agree upon the revision of the APA, new conditions will be effective from the date of the revision till the end of the existing arrangement period. If the tax-payer does not accept the revision of the arrangement, the administration may cancel the APA unilaterally.

Cancellation of an APA:

The Administration can cancel an existing Advance Pricing Arrangement unilaterally and the provisions of the APA will not be effective from the signing date and it can induce the tax payer to the tax scrutiny by regarding as the arrangement was never signed

  • If the tax payer does not obey the conditions mentioned in the Advance Pricing Arrangements,
  • If the information and documents provided by the taxpayer during the application and subsequent periods (including annual reports) are determined as missing, wrong or misleading,

In addition, if the annual report which must be sent to the Administration every year before the corporate tax return declaration date is not presented on time; existing arrangement can be cancelled from the start of the related fiscal year in which the report is prepared.


There is not any special penalty if the transfer pricing regulations violated. General tax penalties are effective when the transfer prices are not arm's length and if there is a tax exposure.

Turkish Tax Procedural Code Articles related with tax penalties will be applied for the taxpayers who are examined and observed to have been in transaction not in line with Arm's Length range and as a result distribute disguised profit via transfer pricing. There will be procedural incompliance penalty if documentation requirements are not fulfilled.


The new corporate tax law numbered 5520 article 13, brought new rules for transfer pricing in Turkey. The new rules are very similar with OECD rules. Even though the new law is effective since 1 Jan 2007, the general communiqué has just published on official gazette on November 18, and the government decree is published in the official gazette on December 6. The government decree and the general communiqué sets detailed regulations about methods. According to general communiqué all corporate taxpayers have to submit a form about their related party transaction with their tax return, Big Taxpayers Tax Office members have to prepare a yearly transfer pricing report for their domestic and international related party transactions, all other corporate taxpayers have to prepare a yearly transfer pricing report for only their international related party transaction, by corporate tax return submission date and have to submit when required by tax administration or tax auditors. Corporate taxpayers who doesn't have international related party transactions, and individual taxpayers are not required to prepare a yearly transfer pricing report, but they have to prepare transfer pricing documents stated on the general communiqué

First published by the BNA

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions