Transfer Pricing in Türkiye

The legal framework

Türkiye does not have a transfer pricing statute in the ordinary sense; it has a disguised profit distribution rule. Article 13 of Corporate Tax Law No. 5520, in force since 1 January 2007, is headed "disguised profit distribution through transfer pricing", and that framing drives everything downstream. Article 13(3) states the arm's length principle and makes retention of the supporting records compulsory; Article 11(1)(c) denies any deduction for what is found to have been distributed. Individuals in business are caught by Article 41(1)(5) of Income Tax Law No. 193, which cross-refers to Article 13.

The operating detail sits in secondary law: Council of Ministers Decision No. 2007/12888, rewritten by Presidential Decision No. 2151 (2020) and amended by Presidential Decision No. 8956 (2024); and General Communiqué Serial No. 1 of 18 November 2007, amended five times, most recently by Serial No. 5 of 17 October 2024.

Two features set the regime apart. First, the 10% threshold inserted by Law No. 6728 in 2016: a relationship arising through shareholding requires a 10% shareholding, voting or profit-share right, aggregated across related persons, and Article 13(9) lets the President move that floor to 1% or 25%. Second, Article 13(7): a purely domestic adjustment between resident related parties requires a Treasury loss, meaning an aggregate shortfall or delay in tax accrued across both sides. Absent leakage there is effectively no domestic exposure — a point OECD-style summaries routinely miss. Article 13(2) also deems dealings with persons in jurisdictions announced by the President to be related-party transactions; no such list appears to have been published, so treat the power as dormant rather than dead.

Methods, comparables and benchmarking

Article 13(4) lists the comparable price, cost plus and resale price methods and the transactional profit methods, plus a residual power for the taxpayer to construct its own method where none of the listed methods produces an arm's length result. There is no statutory hierarchy, but the Communiqué adds a tie-break OECD-trained advisers often overlook: where methods are equally applicable, traditional transaction methods are preferred to profit methods.

Internal comparables must also be exhausted first. Section 4 is explicit that an internal comparable must be used, and an external one becomes available only where none exists or the internal figure is unreliable. A pan-European database study opened without a documented search of the taxpayer's own third-party dealings is vulnerable on its face.

Range mechanics differ from the interquartile convention. Section 4.2 defines the arm's length range as the results produced by applying one method to different comparable data, or different methods to the same data. Any point within the range is accepted, and the taxpayer may select using the arithmetic mean, mode, median or whatever measure is most reasonable. Where the price falls outside, it is re-determined by reference to the range on that same basis — there is no automatic adjustment to the median.

Neither the Law nor the Communiqué defines a tested party, though the statutory description of the net margin method is framed around the taxpayer's own margin. Nothing restricts comparables to Turkish companies; the frequent claim that GİB prefers local comparables is a practice observation, not a rule. There is no commodity guidance, no low value-adding services simplification and no cost contribution regime, and financial transactions have no dedicated guidance — although Article 11(1)(i) disallows 10% of the financing costs on foreign liabilities exceeding equity.

Documentation: what GİB expects

Five obligations make up the package, imposed under Articles 148, 149 and repeated Article 257 of Tax Procedure Law No. 213. Apart from one form, none is filed with the return; all are produced on demand to the Revenue Administration (Gelir İdaresi Başkanlığı) or to authorised inspectors.

The master file is required of a corporate taxpayer in a multinational group where the previous period's accounts show total assets of TRY 500 million or more and net sales of TRY 500 million or more. Both tests must be met. It is due by the end of the following accounting period; a group file prepared abroad is acceptable with a Turkish translation.

The annual transfer pricing report — the local file — must exist by the corporate tax return deadline, which under Article 14(3) runs from the 1st to the evening of the 25th day of the fourth month after the period closes, so 25 April for calendar-year taxpayers. (Article 14(5), sometimes cited for this, is the separate rule for cooperatives whose income is only withheld immovable-property rents.) There is no monetary de minimis. It covers all related-party transactions of taxpayers registered with the İstanbul Defterdarlığı Large Taxpayers Tax Office; cross-border transactions of every other corporate taxpayer; domestic transactions of free-zone taxpayers; and dealings with foreign branches and with related persons in free zones. Section 7.3.3, as rewritten by Communiqué Serial No. 4 in 2020, now prescribes seventeen content items lettered (a) to (n) — not the fourteen of the 2007 original — the additions being country-by-country transaction amounts, the reasoning for any multi-year analysis, copies of existing unilateral, bilateral or multilateral APAs, and the financial information used in applying the method. Copies of all related-party contracts for the year remain on the list. Ek-4 is not that list but the five-part report format: general information, related persons, transaction details, transfer pricing analysis and conclusion.

Country-by-country reporting bites at consolidated group revenue of EUR 750 million, filed by a Turkish ultimate or surrogate parent within twelve months of period end, in XML through the BTRANS system. The notification moved in 2024: it is now due by the end of the sixth month following the reportable period rather than in June, filed through the Digital Tax Office.

The Annex-3 transfer pricing, controlled foreign company and thin capitalisation form is the only routine annual disclosure. Related parties whose annual net transaction total is below TRY 30,000 may be omitted. That threshold is not a 2007 relic, as is often said: the 2007 and 2008 versions of the form required every related-party transaction to be reported, and the de minimis was introduced by Communiqué Serial No. 4 in 2020. It has not moved since, and is now negligible. Documentation must be in Turkish. There is no transfer-pricing-specific production deadline; Article 14 of the Tax Procedure Law sets the administrative minimum at 15 days, the source of the commonly quoted figure.

Audits, penalties and the enforcement climate

Audits are run by the Tax Inspection Board (Vergi Denetim Kurulu), not by GİB. There is no transfer-pricing-specific penalty. An established disguised distribution attracts the Article 344 tax loss penalty of one times the tax lost, trebled where Article 359 conduct such as false documentation is involved, plus late payment interest. Article 13(8), inserted in 2016, halves that penalty where the documentation obligations were met fully and on time; immaterial errors do not forfeit the reduction, but Article 359 conduct does.

Documentation failures fall under repeated Article 355 of the Tax Procedure Law, revalued annually: from 1 January 2026, TRY 35,000 for first-class merchants and self-employed professionals, TRY 17,000 for second-class merchants and TRY 8,700 otherwise. There is no CbCR-specific penalty, and these sums are modest by comparative standards.

The real exposure is the secondary adjustment. Under Article 13(6) the distributed amount is treated as a dividend as at the last day of the period. Where the recipient is a non-resident company, an individual or a person exempt from tax, it is treated as a net dividend, grossed up and subjected to withholding — raised from 10% to 15% by Presidential Decision No. 9286 of 21 December 2024. This is automatic, not elective, and often exceeds the corporate tax in issue.

Assessments are time-barred five years from the beginning of the year following the year the tax claim arose. The current audit theme is visible in the Danıştay Tax Litigation Chambers Board decisions of 14 February 2024, which struck down assessments recharacterising till cash and shareholder current accounts as interest-free related-party lending, because the inspectors had not analysed the accounts or cross-checked the counterparty.

Dispute resolution and advance certainty

Correction at the counterparty is conditional: it follows only once the tax assessed on the distributing company is final and paid, and only to the extent finalised and paid. The Danıştay reads this pragmatically — in E:2022/1415, K:2024/62 it allowed correction at the lender where the borrower had disallowed the interest but paid no tax because it was loss-making.

Post-assessment routes are settlement within 30 days, the Article 376 penalty reduction, or the tax court with appeal to istinaf and then the Danıştay. Note a significant change: Law No. 7524, in force 2 August 2024, appears to remove the tax principal from settlement, leaving only penalties settleable. Most published country summaries still describe settlement as covering the tax; confirm locally before relying on it.

The mutual agreement procedure gained an express domestic basis in additional Articles 14 to 18 of the Tax Procedure Law for applications from 1 January 2022, and an application suspends both the litigation period and the limitation period. If agreement is reached the taxpayer has 30 days to accept; silence counts as rejection, and acceptance closes off litigation, the Article 376 reduction and settlement.

Advance pricing agreements are open to corporate taxpayers unilaterally, bilaterally and multilaterally, with no filing deadline and no fee since the 2017 repeal of the tariff. Terms run to a maximum of five years; GİB targets nine months for a unilateral outcome and 18 months for bilateral cases. Rollback into open periods is available through the voluntary disclosure route, with declaration and payment due within 15 days of signature. Twenty agreements had been signed in total by the end of 2025 — the programme works, but it is small.

Pillar Two and what changes in 2026

Law No. 7524 of 28 July 2024 added a Fifth Part to the Corporate Tax Law implementing the GloBE rules, applying to constituent entities of groups whose ultimate parent had annual consolidated revenue above the lira equivalent of EUR 750 million in at least two of the four preceding periods. The charge applies from the 2024 period, with the UTPR-type provisions from 1 January 2025, and GİB's implementing communiqué was published on 26 December 2025. A transitional CbCR safe harbour runs to the end of the 2026 period.

Separately, Article 32/C imposes a domestic minimum corporate tax of 10% of corporate income before deductions and exemptions, explained in Corporate Tax General Communiqué Serial No. 23 of 28 September 2024.

For transfer pricing the consequence is that the country-by-country report is no longer only a risk-assessment document: it now feeds the safe harbour computation, so inconsistency between CbC data, the local file and the statutory accounts carries a second cost. GİB reports 2023-year data exchanged with 61 jurisdictions and received from 49.

Amount B has not been adopted. No Turkish instrument mentions it, and GİB's only recorded involvement is attendance at the OECD pricing-model work stream during 2025 — not adopted to date, rather than rejected.

How practitioners should respond

Four things decide outcomes in Türkiye. Document the internal comparable search first: the ranking rule in the Communiqué is not decorative, and a benchmarking study that begins at a database is the easiest thing for an inspector to attack. Second, model the secondary adjustment before arguing about the primary one — 15% withholding on a grossed-up deemed dividend, plus the Article 344 penalty and interest, is usually the number that decides whether to litigate or settle. Third, treat the Article 13(8) halving as a compliance target rather than a bonus: a complete local file by 25 April, meeting all seventeen prescribed content items, is worth half the penalty on any later assessment. Fourth, watch the diary, because the CbC notification is now sixth-month-end rather than June.

The regime rewards paperwork discipline and punishes improvisation. Where a cross-border structure is genuinely uncertain, an APA remains the only route to prospective certainty, at no fee.