Introduction
Turkey has implemented new Transfer Pricing regulations through its Tax Administration. These regulations intend to align local practices with international and OECD standards, focusing on transparency and control of intercompany transactions against tax avoidance and ensuring compliance of large multinational corporations in the country.
Main Amendments in Transfer Pricing Legislation
Recent amendments in the Turkish legislation introduce new requirements for Transfer Pricing documentation and filing, addressing key points:
- Documentation of Intercompany Transactions: The new regulations require comprehensive documentation of related party transactions, focusing on specifying the nature and purpose of each transaction. Transparency in contracts and agreements between related entities and subsidiaries is currently mandatory.
- Master File and Local File: Turkey joins the global trend of implementing a dual reporting system, where companies must file a Master File covering the multinational group structure and strategy and a local file focused on Turkish operations. This approach allows for a detailed and comparative analysis of operations and avoids double taxation.
- Transfer Pricing and Comparable Pricing Methods: Companies should support the chosen Transfer Pricing method, such as the transactional net margin or the comparable uncontrolled price. They should also detail the criteria and sources employed to select comparables, ensuring accuracy and fairness in allocating revenues and costs.
- Annual Review and Policy Update: The regulations require companies to update their Transfer Pricing documentation and policies to ensure the reflection of the current tax situation and corporate strategies annually.
Compliance with the New Regulations
These amendments intend to improve tax transparency and decrease Transfer Pricing risks, which benefits both companies and the Turkish government by creating a fair and balanced compliance environment. Multinational companies operating in Turkey shall adjust their policies and procedures to adapt to these new provisions.
Conclusion and Call to Action
Compliance with new Transfer Pricing regulations in Turkey ensures proper tax management and avoids penalties and tax risks. Please consult with us and strengthen your tax position today!
Sources: SRP Legal y Resmi Gazete
