Turkey’s Revenue Administration has issued an updated Guideline on the Mutual Agreement Procedure (MAP) for the elimination of double taxation agreements, effective for requests made from 1 January 2022.

The guideline is available in both Turkish and English.

The MAP Guideline outlines the overall framework of the Mutual Agreement Procedure, including how to submit requests, the process and outcomes, its relationship with domestic remedies, and its application in advance pricing agreements.

All of the double taxation agreements (DTA) Turkey has concluded contain provisions related to the Mutual Agreement Procedure (MAP).

The MAP is generally stipulated under Article 25 of the DTAs and in order to make the MAP more efficient and effective regulations have been made in the fourth section titled “Mutual Agreement Procedure” of the Turkish Tax Procedure Law No. 213 (TPL). Texts of the DTAs concluded by Turkey which are still in force and the information about these DTAs along with the related provisions of the TPL are available on our website.

Despite comprehensive and carefully designed provisions of the DTAs, erroneous procedures and misinterpretations may sometimes occur in the course of the application of such provisions by related tax authorities of the Contracting States. It could also be seen that sometimes the provisions of the DTAs are not taken into consideration at all.

A common way for taxpayers who face such undesired circumstances and cannot solve their problems with the related tax authority is to have recourse to national remedies such as litigation and reconciliation procedures. The “MAP” in the DTAs offers to taxpayers a way of solution to present their case either to the competent authority of the Contracting State of which they are residents or as the case may be, to the competent authority of the Contracting State of which they are citizens, or else to the other related Contracting State’s competent authority, irrespective of the national remedies provided by the domestic laws of those States.

In this sense, the aim of this guideline is to inform taxpayers on the “MAP” Article included in all DTAs as well as on the application of this Article.

GENERAL FRAMEWORK OF THE ARTICLE ON MAP

The MAP Article included in a DTA explains the steps to be followed by the residents of one of the Contracting States when they consider that the actions taken by one or both of the Contracting States in respect of them are not or will not likely be in accordance with the provisions of the DTA. Taxpayers facing such a situation have the right to present their cases;

• to the competent authorities of the Contracting State of which they are residents or to the competent authorities of the other Contracting State subject to the provisions of the related DTA irrespective of the remedies provided by the domestic law of the Contracting States,
• to the competent authorities of the State of which they are citizens if they are subject to an unfavorable taxation in the other State due to their nationalities compared to the citizens of that other State.

Under the same MAP Article, competent authorities of the Contracting States may try to resolve the problems arising from the interpretation or application of a DTA with the use of the MAP. Accordingly, competent authorities of the Contracting States may commence a MAP process for an incomplete or an ambiguous definition in a DTA.