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KPMG VERGİ / Yayınlar / Mali Bültenler / MaliBultenDetay


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2016/4 With the New Law (No: 6728) Effective as of Aug 9, 2016, New Regulations Related to Transfer Pricing Rules Enacted

With the amendments on Article 13 of the Corporate Tax Law numbered 5520; Turkish transfer pricing rules have been more converged to OECD transfer pricing guidelines.


The New Law stipulates 10% threshold to “related party” definition, it removes the strict hierarchy amongst transfer pricing methods, it allows certain type of “roll back” for APA agreements and removes 50 percent of tax penalties for taxpayers who fulfill timely and proper documentation requirements. Transfer pricing related new regulations are in force as of August 9, 2016.

Threshold for related party definition
With the Article 59 of the New Law numbered 6728, following clauses have been added to the 2nd paragraph of the Article 13 of the Law numbered 5520: 

“In order for a case to be deemed as disguised profit distribution through direct or indirect shareholder relationship, at least a 10 percent shareholder relationship, voting or dividend rights must be present. In certain circumstances where at least 10 percent direct or indirect voting or dividends rights are present without a shareholding relationship, parties will also be deemed as affiliated. With regards to related parties, mentioned ratios will be considered collectively.”

Recognition of Transitional Net Margin and Profit Split Method

Clause (ç) of the fourth paragraph have been changed as stated below and clause (d) have been added following this clause.

“ç) Transactional profit methods: Refers to the methods based on profits arising from the transactions between related parties in designation of arm’s length price or return. These methods consist of transactional net margin method and profit split method. Transactional net margin method is based on the examination of an established net profit margin realized by the taxpayer resulting from a controlled transaction on certain relevant and appropriate basis such as costs, sales or assets. Profit split method refers to the arm’s length split of total operating margin or loss between related parties realized from one or more related party transactions with regards to the functions performed and risks borne by each party.

“d) In circumstances where an arm’s length price or remuneration could not be identified via one of the methods mentioned above, another method which is consistent with the nature of the related party transaction and defined by the taxpayer can be utilized”

Roll back of Advance Pricing Agreements (APA)

C) Following clauses have been added to the fifth paragraph: “Taxpayer and the Ministry, is permitted to implement the designated method for previous tax periods which are not barred by statue of time limitations by including it in the agreement scope given that the practice of repentance and correction precepts of the Tax Procedure Law are applicable and the agreement conditions are valid for mentioned periods.”

Removal of 50 percent of tax penalty 

Ç) Following paragraph have been added following the seventh clause and the present eight paragraph have been continued as such.

"(8) In circumstances where transfer pricing documentation obligations are fulfilled completely and in due time, loss of tax penalty arising from under assessed or past due taxes by reason of disguised profit distribution will be imposed with a 50 percent discount (excluding the states which give rise to loss of tax through acts worded in 359th clause of Tax Procedure Law)”