A draft “transfer pricing communique” has been published in Turkey, and it generally reflects measures of the OECD’s base erosion and profit shifting (BEPS) Action 13 on country-by-country reporting and transfer pricing documentation. The amendments related to transfer pricing that aim at satisfying the BEPS Action 13 transfer pricing and reporting requirements would be regulated by a draft Council of Minister decision (2017/01), and it is expected to be effective before the end of 2017.
The draft Council of Minister decision introduced the definition of the following terms (substantially similar to those in the OECD’s definitions) under the country-by-country (CbC) reporting rules—group; multinational enterprises; ultimate parent; reporting entity; surrogate entity; and systemic failure.
The draft Council of Minister decision also introduces amendments to the Turkish transfer pricing rules that would “converge” with respect to the OECD transfer pricing guidelines. The draft decision provides for:
The draft decision includes new documentation rules that are in line with OECD BEPS Action 13 reporting and documentation requirements. With the draft decree, the transfer pricing documentation would be divided into three components—Master file, Local file, and country-by-country (CbC) reporting.
Master file: Multinational taxpayers having net sales and assets greater than 250 million TRY would be required to prepare a Master file. The first Master file would relate to the tax period 2017 and would need to be prepared within two months after the submission of corporate tax income returns and be submitted to tax authorities upon request.
Local file: The requirement is substantially the same as the former annual transfer pricing report. All taxpayers having cross-border transactions (for large corporation taxpayers both domestic and cross-border intercompany transactions) would have to prepare local transfer pricing report. In addition companies operating in free trade zones would be required to prepare transfer pricing report for their domestic intercompany transactions.
CbC reports: The CbC reporting would apply for taxpayers that belong to a multinational enterprise group having a consolidated revenue of 2,37 billion TRY (approximately €750 million). The CbC report would report the amount of profit/loss before tax, paid/accrued tax, capital, previous year losses, headcount, tangible products (excluding cash and cash equivalents), all of which are generally in line with the OECD measures. The first CbC report would cover the tax period 2016 and would be submitted by 31 December 2017.
A notification requirement provides that the reporting entity (whether the ultimate parent company or a surrogate entity) of multinational entities covered by the CbC rules would report to the Turkish tax authorities which entity would be filing the CbC report, within three months after the effective date of the decree. For all subsequent reporting periods, this notification would need to be made by the end of March, in writing to the tax authorities.
Read a May 2017 report [PDF 200 KB] prepared by the KPMG member firm in Turkey
© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.