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As taxpayers in Turkey prepare their transfer pricing reports for the April 25 due date, the government is selecting and training personnel from each of its tax offices on various corporate tax issues, including transfer pricing.
Transfer pricing requirements in Turkey are stated under Article 13 of the Corporate Tax Law 5520, "Disguised Profit Distribution via Transfer Pricing." Details on implementation are set forth in the General Communiqué on Disguised Profit Distribution via Transfer Pricing No. 1, dated Nov. 18, 2007, and a government decree dated Dec. 6, 2007.1 The General Communiqué No. 1 was updated with General Communiqué No. 2 on April 22, 2008. The government in April 2008 also published a decree to expand its advance pricing agreement program, revise requirements for corporate transfer pricing annual reports, and extend the time for filing 2007 fiscal year reports2
This article provides an update on transfer pricing documentation requirements and advance pricing agreement procedures in Turkey.
The required documentation form for transfer pricing and thin capitalization-Appendix 2 of General Communique No. 1-is published in the Text section of this issue along with Appendices 1 and 3 containing APA and transfer pricing report templates.
Documentation
According to the government decree and General Communiqué No. 1, taxpayers have two different documentation requirements: preparing both a transfer pricing form and a yearly transfer pricing report.
According to the new rules, taxpayers are obligated to complete a form entitled "Transfer Pricing, Controlled Foreign Company and Thin Capitalization Form" attached to the company's annual corporate tax return. In this form, taxpayers are required to present all intra-group transactions that took place during the year and indicate the selected transfer pricing methods to test the arm's-length nature of the intra-group transactions. Taxpayers also are required to fill out the sections on controlled foreign company and thin capitalization contained in the form.
Corporate...