The advance pricing agreement (APA) mechanism, which is a new practice introduced to the Turkish tax system by Corporate Income Tax Law No.5520, is an alternative solution for the taxpayers who do not want to encounter any future tax disputes related to transfer pricing.
APAs become effective as soon as they are signed. On the other hand, an opportunity to apply the method determined by the taxpayer and the Turkish Revenue Administration to previous taxation periods, for which the statute of limitations has not expired, is provided by the last amendments in the relevant legislation.
The process of evaluating the application for an APA takes at least 24 to 36 months, depending on whether the agreement is unilateral, bilateral or multilateral and how difficult the related party transaction is. In order to address this issue, Turkish Revenue Administration recently introduced certain deadlines for concluding APAs in a timely manner. For unilateral APAs, the whole APA process will be concluded within 9 months from the date when the written application is entered into the records of Turkish Revenue Administration; for bilateral and multilateral APAs this duration will be 18 months. In case of a delay, Turkish Revenue Administration/the relevant tax administrations and the taxpayer might decide to enhance the duration as agreed collectively.
Taking all factors into consideration; making a good preparation before the APA application, using time effectively and creating an accurate strategy are all essential. In this context, the PwC Advance Pricing Agreement Team will help your company complete the application process effectively, quickly and successfully, with know-how gathered from consulting services provided in relation to these types of agreements, and experience gained as part of the PwC network.
For more information about advance pricing agreements, please read the attached document.