On 25 February 2020, the Turkish Revenue Administration has published Presidential Decree No. 2151 in the official gazette, which amends transfer pricing documentation rules. The decree aims to set out OECD’s Base Erosion and Profit Shifting (BEPS) action 13 reporting and documentation requirements. The main measures are as follows:

Transfer pricing documentation in line with BEPS action 13

Local File: Corporate income taxpayers registered to the Large Taxpayers Tax Office for their domestic and foreign-related party transactions, registered to other Tax Offices for their foreign related-party transactions and corporate income taxpayers that are operating in Free Trade Zones (FTZ) in Turkey are required to prepare a transfer pricing report for their domestic intercompany transactions.

Master File: Multinational enterprises (MNEs) with TRY 500 million in both net sales and assets as per the previous accounting period are required to prepare the master file for the accounting period after 1 January 2019.

Country-by-Country (CbC) report: Ultimate parent company of a group that is resident in Turkey for tax purposes and has a minimum consolidated turnover of EUR 750 million is required to prepare a CbC Report by the end of the twelfth month following its fiscal year. The first Country by Country Report must be submitted to the Turkish Tax Authority by 31 December 2020 for the fiscal year 2019. CbC notification should be submitted by end of the 6 months after the effective date of the decree. So the first CbC shall be notified to the Tax Authority until 31 August 2020.

Advance Pricing Agreement (APA)

The Decree increases the time limit for the effectiveness of the APA from 3 years to 5 years. Moreover, the renewal of an existing APA is reduced to 6 months from 9 months.

Other Amendments

The other amendments are a 10 % threshold for related party definition, the rollback of APA and relief from 50% of the tax penalty in case proper and timely documentation is in place and recognition of the Transitional Net Margin and Profit Split Method.

The Decree is effective from 25 February 2020.