Attorney at Law



Within the scope of the "Review of Transfer Pricing Certification Obligations (Guide)" of the OECD's BEPS 13th Action Plan, it is aimed to determine related person transactions accurately without error despite the complexity and the ever-increasing volume of the number of transactions by changing the documentation obligations.


In this regard, a three-stage documentation structure is stipulated namely as; master file, local file, Country-by Country Reporting (“CBCR”).


Country-by Country Reporting is the template containing information such as business lines, number of employees, assets, income and taxes paid in the relevant countries of the multinational companies and subsidiaries. It is foreseen that such information will be reported to the tax administration based on this template.


In accordance with Turkish Tax Legislation and BEPS harmonization process, new transfer pricing documentation obligations were introduced in the Official Gazette dated 25 February 2020 and numbered 31050 with the Presidential Decree No. 2151. This Decree amended the Resolution of the Council of Ministers No. 2007/12888 on the Transfer Pricing of Disguised Profit Distribution through Transfer Pricing.


The corporate taxpayers that are covered by the obligation of documentation will be required to prepare a “General Report” (CbCR Report) in addition to the Annual Transfer Pricing Report, which is currently required by our legislation.


Based on the new rules stipulated, a foreign multinational entity (MNE) resident in Turkey (whose ultimate parent entity’s (UPE’s) annual consolidated group revenue equal to or higher than EUR 750 million in the preceding fiscal year), is required to file a local CbCR on behalf of the group with the Turkish Tax Authority, if one of the following conditions applies:


  • the Ultimate Parent Entity (UPE) of the MNE Group is not obligated to file a CbCR in its jurisdiction of tax residence; or,


  • the jurisdiction in which the UPE is resident for tax purposes has a current International Agreement with Turkey, but does not have a Qualifying Competent Authority Agreement in effect for the exchange of CbCR information; or,


  • there has been a systemic failure in exchange of information.


If there is more than one entity of the same MNE Group that are resident in Turkey, and one or more of the conditions set out above apply to the group, the MNE Group may designate one of the entities to file the local CbCR in Turkey.


The deadline for filing the CbCR is no later than 12 months after the last day of the foreign MNE’s reported fiscal year. The CbCR would be filed electronically through the Turkish Revenue Authority’s BTRANS system and the first reporting period is expected to be for 2019.


Given the above information, as of the date of February 25, 2020, Turkey is not a party to any qualifying competent authority agreement (QCAA) with any jurisdiction for the exchange of CbCR information.


The foreign MNEs resident in Turkey meeting the above conditions, would be subject to local CbCR filing with the Turkish Tax Authority (TTA). Upon the completion of any QCAA with any jurisdiction, the TTA would announce the list of jurisdictions party to the agreements. The foreign MNEs residents in Turkey are required to follow Turkey’s QCAA situation cautiously in order to meet their local CbCR obligations.


A MNE subject to CbCR filing has to notify the TTA through a prior notification form in electronic format as to whether it is the UPE or the surrogate entity of a MNE group that is required to file a CbCR, the identity and tax residence of the entity filing the CbCR on behalf of the MNE group (where the MNE is not the UPE or surrogate entity).


The CbCR prior notification deadline is determined as the end of August 2020 for the first CbCR period.


Turkey has adopted penalties for non-compliant taxpayers within the scope of documentation- obligations. Non-filing, late-filing, incomplete or inaccurate filing of reports would be subject to a procedural tax penalty under Turkish Tax Procedural Law.


As a result, it can be said that Turkey’s situation in signing the QCAA with any jurisdiction in terms of exchange of CbCR information should be followed by foreign MNEs qualified for local CbCR in Turkey, since the deadlines are short to meet CbCR filing and prior notification liabilities.


Based on relevant transfer pricing regulations in force, the TTA has the authority to change the first reporting period as 2020, or postpone the implementation. We suggest the current developments should be followed closely with respect to transfer pricing documentation.