The General Communiqués on Disguised Profit Distribution Through Transfer Pricing (Serial No: 4 and 5) in Turkey introduce significant changes to transfer pricing regulations, aligning them with international standards and providing detailed guidance for taxpayers.

General Communiqué No. 4

Published in the Official Gazette on September 1, 2020, Communiqué No. 4 revises the original General Communiqué No. 1 and incorporates updates based on Presidential Decree No. 2151 issued on February 25, 2020. Key features include:

• Three-Tiered Documentation Requirements:
  • Country-by-Country Reporting: Applicable to multinational enterprises with consolidated revenues of €750 million or more.
  • Master File: Required for corporate taxpayers with assets and net sales exceeding TRY 500 million.
  • Annual Transfer Pricing Report: Mandatory for all corporate taxpayers engaged in related-party transactions.
• Transfer Pricing Methods: Removal of the hierarchy in selecting methods, allowing taxpayers to choose the most appropriate method for each transaction.
• Advance Pricing Agreements (APAs): Retroactive application and extended duration of APAs up to five years.
• Penalty Provisions: Tax loss penalties are reduced by 50% if documentation obligations are fully met on time, except in cases involving tax evasion.
• Clarifications on Related Party Transactions: Detailed requirements for transactions with foreign branches and entities in Turkish Free Trade Zones.

General Communiqué No. 5

Published in the Official Gazette on October 17, 2024, Communiqué No. 5 primarily addresses administrative updates:

• Name Change: The “Large Taxpayers Tax Office” has been renamed as the “Istanbul Revenue Office Large Taxpayers Tax Office Directorate” to reflect organizational changes.

This communiqué does not introduce substantive changes to transfer pricing regulations but focuses on procedural adjustments.

Conclusion

The updates under Communiqués No. 4 and No. 5 reflect Turkey’s commitment to aligning its transfer pricing framework with OECD’s BEPS standards while enhancing clarity and compliance mechanisms for taxpayers. Detailed documentation and adherence to reporting deadlines are crucial to avoid penalties and benefit from reduced tax loss penalties.