with Serial No. 4 which amends the
General Communiqué on Disguised Profit Distribution through Transfer Pricing
(Serial No. 1) has been published in the
Official Gazette dated September 1, 2020.
With the communiqué, Country by Country Reporting and
Master File certification obligations within the scope of the OECD Base Erosion
and Profit Shifting (BEPS) project Action 13 were explained in detail.
With the Communiqué, the Country by Country Report
format and notification format are shared and presented to the taxpayers.
Specific to the first year, Country by Country Report
Notification Period has been extended until 23:59 on October 30, 2020. Country
by Country Report notification period for the upcoming years will be the end of
June. Country by Country report for the 2019 accounting period will be
submitted to the Tax Administration until 31.12.2020.
Within the scope of the detailed explanations made
with the Communiqué, it has been understood that Country by Country Report and
Master File applications will be based on the OECD model.
As it is known, with the Presidential Decree No. 2151 dated 24.02.2020, the definition of related party in Article 13 of
Corporate Tax has changed; the hierarchy among transfer pricing methods were
removed, penalty reduction was granted to taxpayers which fulfill transfer pricing
documentation requirements and Advance Pricing Agreements are allowed to be effective retrospectively. Likewise, within the scope of the Presidential
Decree, the section of transfer pricing documentation was rearranged and
sections of the master file, local file and country by country report were added. The Communiqué also explains with examples how
to determine the 10 percent indirect and direct shareholder relationship so
that will be considered for the parties to be considered as related parties
within the scope of transfer pricing.
The Country by Country Report format and notification
format are shared and presented to the taxpayers. Within the scope of the
detailed explanations made with the Communiqué, it has been understood that
Country by Country Report and Master File applications will be based on the
Other highlights within the scope of the Communiqué
are presented below.
First CBCR report will be for year 2019 and will be delivered
until the end of 2020. The MNEs which has consolidated revenue equal or more
than 750 mil Euro are required to file CBCR. In case the ultimate parent entity or
surrogate entity of such MNE is in Turkey, CBCR will be filed to Turkish
In case the
ultimate parent entity or surrogate entity is located outside Turkey, it is
expected that Turkish taxpayers belonging to a such MNE will not locally file
CBCR in Turkey if Turkey has an Qualifying Agreement with such country and
other conditions hold.
As of now, Turkey has not signed CBCR MCAA, therefore
in case Qualifying Agreement will not be signed and activated before the end of
December, Turkish subsidiaries of a MNE will be required to locally file CBCR
In the Communiqué, it is stated that Ultimate Parent
Entity of a MNE located in Turkey may assign surrogate entities abroad Turkey.
However it is still mandatory for such MNE to file CBCR to Turkish Administration
as well. With this description, it has been noted that even the ultimate parent
company of a multinational entity group is in Turkey, it may still appoint
surrogate entity in a different jurisdiction to be able to make its CBCR
automatically exchanged with other Authorities in the lack of a signed
Qualifying Agreement for the first year of implementation.
Specific to the first year, Country by Country Report
Notification Period has been extended until 23:59 on October 30, 2020. In case
of the ultimate parent company of the multinational entity group is a resident
in Turkey, notification on behalf of the multinational entity is only to be
done by the ultimate parent company.
Once the notification is submitted within time,
taxpayers still have chance to correct if necessary their notification until
the end of the following month of the
Country by Country Reporting will be delivered to the
Administration in xml format over the BTRANS system. The schema check of the
transmitted XML files will be done during the BTRANS file upload, and incorrect
files will be rejected.
Taxpayers must complete their BTRANS applications
before the first data transmission date.
According to the Communiqué, the "notification
form for country by country reporting" and "country by country
report" can be sent by the taxpayer, as well as a certified public
accountant with a consultancy agreement, or a sworn tax accountants with an income or corporate tax
return compliance agreement (Tax Compliance Agreement) for the relevant period.
Country by country report notification form, country
by country report, transfer pricing form and transfer pricing report have been
specified as documentation requirements for transfer pricing for taxpayers. As
known; taxpayers who fulfill transfer pricing documentation requirements
benefit 50 percent penalty reduction. In order to benefit from penalty
reduction, taxpayers are also required to fulfill CBCR related requirements.
Additionally, there will be a threshold for the
amounts to be included in the Annual Transfer Pricing Form (Annex 2) which is
attached to the Corporate Income Tax Return . Related parties with a limit exceeding
30.000 TL for each purchase or sale of goods or services within the related
accounting period will be included in the form.
For detailed information on the subject, you can reach
the Communiqué from the link below.