The Presidential Decree No. 2151 (“Decree”), published in the Official Gazette dated 25th February 2020 and No. 31050 introduced new transfer pricing documentation rules within the scope of OECD BEPS Action Plan No.13. As per the amendment; corporate taxpayers will be required to prepare Master File, Country by Country Report (“CbCR”) and Annual Transfer Pricing Report (beginning from the fiscal year of 2019). The Decree entered into force through its promulgation.
The new documentation rules may be summarized as follows:
a) The Master File:
It will be prepared by corporate taxpayers, who are affiliated with the multinational group of companies and who has both the asset size (corporate Tax declaration pertaining to the previous fiscal period) and the net sales amount (according to the income statement) equal or more than TRY 500 million.
The first Master File will be prepared for the fiscal year of 2019 by the end of 2020. Those who are subject to a special fiscal period will prepare the first Master File for the fiscal period starting after 1st January 2019.
b) The CbCR:
It will be prepared by the ultimate parent company of a multinational enterprise group that is resident in Turkey, with a consolidated group income equal or more that Euro 750 million as per to the consolidated financial statements of the former accounting period. This report should be prepared and submitted to Turkish Tax Administration on 31.12.2020 at the latest.
The ultimate parent company resident in Turkey that is subject to a special fiscal period will prepare the first CbCR for the fiscal period starting after 1st January 2019 and will submit it to the Turkish Tax Authority by the end of the 12th month following the relevant special fiscal period.
c) The Annual TP Report:
It will be prepared for the transactions stated below:
- Domestic and foreign transactions of the taxpayers registered to the Large Taxpayers Office in Turkey and conducted with related parties during an accounting period,
- Foreign transactions of taxpayers, except for those registered to the Large Taxpayers Office in Turkey and conducted with related parties within an accounting period,
- Domestic transactions of taxpayers operating in free zone and conducted with related parties,
- Transactions of all taxpayers conducted with foreign branch and related parties residing in free zone.
Conclusion
The new transfer pricing documentation rules are prepared within the scope of OECD’s BEPS Action Plan 13 and international standards. It is expected from Turkish Tax Administration to publish the relevant secondary legislation shortly.
