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Reporting and benchmarking analysis services

Transparency and documentation requirements, which are increasing with international developments, require transfer pricing documentation to be created fully in line and consistent with legislation. We support you in fully conforming to new developments and changes in documentation requirements, by using the know-how and experience gained in the many reporting projects and benchmarking analyses we have carried out.

According to Turkish transfer pricing legislation, taxpayers have two types of annual documentation requirements:

  • Transfer Pricing Form: This form, as an annex to the corporate income tax return, must be filled out to declare related party transactions performed (by transaction type, transaction amount and method) during the relevant fiscal year.
  • Annual Transfer Pricing Report: A report must be prepared for related party transactions by the end of filing date of the corporate income tax return of the relevant fiscal year, and if requested, this report must be presented to the Turkish Tax Administration or to those who are authorised to make tax inspection.

Annual documentation is a proactive defence instrument in case of tax inspection, enabling taxpayers to be ready for conducting time-consuming and costly retrospective studies on related party transactions, and to show that they use a consistent transfer pricing policy.

Also, as a result of the amendment made by the Law No.6728 to article 13 of the Corporate Income Tax Law No.5520, it is stated that even if a criticism of hidden profit distribution is raised in a tax audit, a 50% reduced tax loss penalty will be applied to taxpayers who had prepared their transfer pricing documentation in a complete and timely manner. Thus, the importance of transfer pricing documentation has further increased with the enactment of this regulation which provides penalty protection and encourages compliance with documentation requirements.

Moreover, during transfer pricing documentation work, a macro analysis is made on the functions performed and risks assumed by the company in its related party transactions and an important opportunity is provided for the company to evaluate itself and take the necessary measures by ensuring that the whole picture is reviewed.

Another point to be aware of is that, the studies in the scope of the BEPS: Base Erosion and Profit Shifting Project, made up of 15 Actions started in 2013 by OECD under the guidance of G-20 countries, were completed in October 2015. In this context, with Action 13, many important new developments were introduced concerning transfer pricing documentation, and a three tiered documentation approach was adopted: country-by-country reporting, master file and local file.

With these developments, the Turkish Tax Administration published the draft Transfer Pricing General Communiqué No. 3 in March 2016, and took the first step towards adopting the new developments introduced in Action 13 into Turkey’s legislation. In addition to the Transfer Pricing Form, the draft General Communique states that a new and more detailed form entitled “Transfer Pricing Form Concerning Transactions with Related Parties” also must be filled out. In this context, transfer pricing documentation has taken on an increasingly more complex and special structure. The changes stated above will become final with the Council of Ministers Decision, expected to be published in the Official Gazette soon.

In this environment, the PwC Transfer Pricing Team, with its expert members, provides professional and independent insight with the following services:

  • review of your company's transfer pricing policies,
  • review of the agreements regulating related party transactions,
  • identifying the function and risk profile of your company,
  • determining the transfer pricing method most appropriate to the nature of your related party transactions, and
  • supporting related party transactions with economic analysis and database search  in terms of internal and external comparables.

For more information about reporting and benchmarking analysis services, please read the attached document.

Contact us

Özlem Güç Alioğlu

Özlem Güç Alioğlu

Transfer Pricing Services, Partner

Tel: +90 212 326 6965

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