As global business expands and multinational companies grow in complexity, transfer pricing has become one of the most important issues in international taxation. The pricing of intercompany transactions directly affects tax bases, profit allocation, and compliance risks, drawing the close attention of tax authorities around the world — including in Turkey.
What Is Transfer Pricing?
Transfer pricing refers to the pricing of transactions between related parties, such as the sale of goods, provision of services, intercompany financing, and licensing of intangible assets.
These prices must comply with the Arm’s Length Principle, meaning they should be equivalent to the prices that would be charged between unrelated, independent parties under similar conditions.
Why Is It Important?
- Ensures accurate and fair profit allocation
- Prevents base erosion and profit shifting (BEPS)
- Reduces the risk of double taxation
- Supports tax compliance and audit readiness
- Aligns with international tax standards (OECD)
️ Legal Framework in Turkey
Turkey’s transfer pricing regulations are governed by Article 13 of the Corporate Income Tax Law No. 5520. As a member of the OECD, Turkey has adopted and implemented the OECD Transfer Pricing Guidelines and has aligned with BEPS Action Plans.
What Is the Arm’s Length Principle?
This principle requires that prices between related parties reflect those that would be charged in similar transactions between independent companies. In practice, companies must choose an appropriate pricing method, such as:
- Comparable Uncontrolled Price (CUP) Method
- Resale Price Method
- Cost Plus Method
- Transactional Net Margin Method (TNMM)
- Profit Split Method
Documentation Requirements in Turkey
Certain taxpayers in Turkey are required to maintain the following documentation:
- Annual Transfer Pricing Report
- Master File – for multinational groups with global consolidated turnover ≥ TRY 3 billion
- Local File – focused on Turkey-specific related-party transactions
- Country-by-Country Report (CbCR) – for large multinational groups
Proper documentation helps reduce the risk of penalties and supports defense in case of a tax audit.
Who Needs Transfer Pricing Compliance?
- Companies with foreign affiliates or subsidiaries
- Multinational groups with operations in Turkey
- Companies engaged in intercompany transactions (sales, loans, services, royalties)
- Taxpayers wishing to reduce audit risk and ensure compliance
OzbekCPA provides professional support in transfer pricing processes, from reporting to documentation at every stage.
📩 For detailed information and consultancy on transfer pricing, please contact us.
