With 2151 numbered Decision on Hidden Income Distribution by Transfer Pricing, there have been amendments made in the General Communique Regarding Hidden Income Distribution by Transfer Pricing published on the Official Gazette No. 31231, dated 01.09.2020.

Amendments are as follows.

  • In order to be deemed to be within the scope of hidden income distribution, situations where a related person bond is formed through partnership, it is required to have at least 10% partnership, voting or dividend right,
  • The term of advance pricing agreement is to be a maximum of 5 years,
  • In cases of renewing advance pricing agreement is required, an application shall be made at least 6 months prior to agreement's expiration date,
  • Changing the expression "transaction-based profit methods" into "transactional profit methods",
  • With the precondition of fulfilling documentation liabilities within the scope of Transfer Pricing, loss of tax penalty will be implemented with 50% discount for the tax loss occurred due to hidden income distribution,
  • Preparation of general report, annual transfer report and country-specific report,

Have been decided.


General Report

General report is to be prepared by corporate taxpayers, who are affiliated with multinational enterprises group and whose asset size of the balance sheet attached to previous corporate tax declaration and net sales amounts are both 500 million TL and above in previous accounting period. The first report is to be prepared for 2019 accounting period.

Country Report

Parent companies of multinational enterprises which are resident in Turkey and have total consolidated group revenue of 750 million Euros and above, are to prepare country-specific report by the end of next 12-month period of general report submission and will present the related report to the administration electronically. First report for 2019 accounting period will be presented to the administrations until 31 December 2020.

Annual Transfer Pricing Report

It is mandatory to prepare the report in accordance with the format given in Annex-4 until the deadline of corporate tax declaration, and after this period is over, if requested, it shall be presented to administration or to those entitled to conduct tax inspection.

Country-specific report is required to be submitted until the end of June, every year. Taxpayers, who are subject to special accounting period application after 2019, are required to submit the report, in accordance with the details in Annex-5, to Internet Tax Office until 23:59 on 30/10/2020.

Annex-5 "Country-Based Report Notification Form" and Annex-6 "Country-Based Report" can be sent by the taxpayers themselves, as well as through the Certified Public Accountants or Sworn-in Public Accountants from whom they have received services in the relevant period.

Related decision can be accessed from here.

Originally published by Cott Group, September 2020

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