A presidential decree—No. 2151 (24 February 2020)—provides guidance concerning country-by-country (CbC) reporting and transfer pricing documentation.
The decree aims to implement the OECD base erosion and profit shifting (BEPS) Action 13 recommendations regarding transfer pricing documentation and reporting requirements in Turkey.
The first CbC report and Master file will relate to the 2019 accounting period and will need to be prepared and submitted in December 2020.
Transfer pricing documentation requirements
The decree sets out new documentation rules that generally are in line with OECD BEPS 13 reporting and documentation requirements. The transfer pricing documentation requirements are separated into three items:
The decree also includes rules for a CbC notification requirement. In effect, MNEs will need to provide notification of which entity will be the reporting entity (whether it will be the ultimate parent entity or a surrogate entity) as well as which entity will provide the CbC report. The CbC notification is to be provided to the Turkish tax authorities within six months after the effective date of the decree (that is, August 2020), For following reporting periods, CbC notification must be made by the end of June with a written submission provided to the tax authorities.
The decree also made the following amendments and additions to the existing transfer pricing rules in Turkey.
Concerning advance pricing agreements (APAs), there are rollback rules, measures increasing the APA period to five years (instead of three years), and requirements that taxpayers must submit a request for renewal of APA before six months (formerly nine months) of the expiration of the APA. The analysis terminology of the APA negotiations has been described as the evaluation of comparable transactions, function analysis, comparable search process, contract terms, transaction adjustments and other key terms.
Read a February 2020 report [PDF 370 KB] prepared by the KPMG member firm in Turkey
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.