With the rise of globalization and cross-border operations, tax disputes between multinational enterprises (MNEs) and tax administrations have become more frequent and complex. Key areas of conflict include transfer pricing, allocation of taxing rights, and risks of double taxation.
To mitigate these challenges, Advance Tax Rulings (ATRs) and Advance Pricing Agreements (APAs) have become essential tools in the post-BEPS era. These mechanisms are gaining importance not only globally, but also in Turkey, as part of a wider shift towards proactive compliance.
BEPS and the Global Push for Dispute Prevention
The OECD’s Base Erosion and Profit Shifting (BEPS) Project introduced a 15-point action plan to combat aggressive tax avoidance. Action 14, in particular, promotes effective dispute prevention and resolution mechanisms, encouraging countries to enhance their legal infrastructure and administrative practices.
As a result, ATRs and APAs have been redesigned to ensure greater legal certainty, transparency, and international cooperation.
What is an Advance Tax Ruling (ATR)?
An Advance Tax Ruling is an official interpretation issued by a tax authority at the request of a taxpayer, regarding the tax treatment of a specific transaction or structure before it takes place.
ATRs in Turkey:
- In Turkey, the Revenue Administration provides binding guidance via formal ruling (private rulings), especially on international tax matters.
- However, compared to many EU countries, Turkey’s ATR system is less institutionalized.
- As part of BEPS Action 5, Turkey has taken steps to increase the transparency and consistency of ATR practices.
What is an Advance Pricing Agreement (APA)?
An APA is a formal agreement between a taxpayer and the tax administration to determine transfer pricing methods for intra-group transactions in advance. This ensures that future pricing aligns with the arm’s length principle and reduces audit risks.
APA Procedure in Turkey:
- APAs have been available in Turkey since 2007, under the Corporate Tax Law.
- Agreements may cover 1 to 5 years, and can be unilateral, bilateral, or multilateral.
- Particularly relevant for large multinational companies to prevent transfer pricing disputes and double taxation.
International Trends: ATRs and APAs After BEPS
European Union:
- The EU mandates mandatory disclosure and exchange of ATRs under DAC3.
- Aims to eliminate harmful tax competition and increase transparency.
United States:
- The APA program is robust, allowing unilateral and bilateral agreements through the IRS Advance Pricing and Mutual Agreement Program (APMA).
- Common among large US-based multinationals.
OECD Guidelines
- OECD recommends automatic exchange of information on certain ATRs and APAs.
- Member countries are encouraged to ensure that rulings are clear, consistent, and open to review.
Challenges in the Turkish Practice
| Challenge | Description |
| Long processing time | APA approvals often take 12–24 months in Turkey. |
| Lack of internal expertise | Medium-sized firms may lack transfer pricing specialists. |
| Limited use of bilateral APAs | Very few mutual agreements exist between Turkey and other states. |
| Low awareness among taxpayers | Many companies are still hesitant to initiate APA/ATR requests. |
Benefits of Using ATRs and APAs
- Reduces legal and tax uncertainty
- Prevents double taxation risks
- Builds strong documentation for audits
- Enhances trust and transparency in cross-border operations
- Offers peace of mind for tax-sensitive structures
How Özbek CPA Can Help
At Özbek CPA, we support businesses with:
- Preparing and submitting ATR (private ruling) requests
- Developing transfer pricing documentation and benchmarking
- Managing APA applications from start to approval
- Advising on BEPS-compliant international tax planning
- Supporting mutual agreement procedures with foreign tax authorities
