The Turkish revenue administration released draft guidance in early April 2015 on advance pricing agreements (APAs). The guidance sets out the information that may be requested by the tax authorities in order to review APA applications. In accordance with the 5th clause of article 13 of the corporate tax law, number 5520 entitled “Disguised Profit Distribution through Transfer Pricing.”, APAs may be available for taxpayers in Turkey to determine the transfer pricing methodology for calculating the transfer prices of services or products either bought from or sold to related parties. The following information on the APA procedure has been given in the draft guidance:
- APA application process explanations
- The application fee or a tariff to be published by the tax authorities
- Guidance on arranging the necessary information and documentation for the APA application including compulsory information like the nature of the transaction, data adequacy and a study of and the reasons for choosing the transfer pricing method
- Types of APA and the scenario for each type
- The important information on related parties (i.e., counter parties to the related transaction subject to the APA) like related parties’ institutions, capital structures, field of activities, current industry and market share, as well as functions, risks, and asset profiles
- Predictions regarding details of economic analyses to be conducted and submitted within the APA process
- The tax authority may request for particular information and documentation from taxpayer after completing the review if required.
