Understanding the international tax context in Türkiye requires a clear grasp of both the legal framework and the economic background. In areas such as transfer pricing, digital economy taxation, and permanent establishment (PE) rules, it is essential to align international standards with local practices. This article outlines the global framework, Türkiye’s position, and practical challenges faced by businesses.
1. Context in International Tax Law
In the global tax environment, “context” is shaped by countries’ economic structures, international trade volume, digitalization levels, and standards developed by international organizations such as the OECD. Key elements include:
- OECD Model Tax Conventions
- BEPS (Base Erosion and Profit Shifting) Project
- Digital Economy Taxation frameworks
- Double Tax Treaties (DTTs) to avoid double taxation
These instruments provide the basis for dispute prevention, cross-border cooperation, and consistent tax application between jurisdictions.
2. Türkiye’s Position in International Tax Policy
As a member of the OECD and the G20, Türkiye has committed to implementing BEPS action plans and aligning with international tax standards. Notable developments include:
- Transfer pricing regulations updated to increase reporting obligations.
- Introduction of the Digital Services Tax in line with global digital economy taxation trends.
- Expansion of the permanent establishment definition in line with OECD commentary, impacting cross-border business activities.
3. Why Context Matters: Türkiye’s Practice and Challenges
While Türkiye largely aligns with international norms, several challenges remain:
- Court decisions may take time to fully incorporate OECD interpretations.
- Discrepancies between legislation and practical enforcement can create uncertainty.
- Compliance costs and the need for business awareness remain significant.
4. Transfer Pricing and Permanent Establishment in Türkiye
Increased transfer pricing audits have brought more scrutiny to permanent establishment assessments. Certain court rulings—aligned with OECD commentary—have led multinational enterprises to re-evaluate their commercial presence and operational structures in Türkiye.
5. Recommendations for Businesses and Advisors
A strong understanding of the international tax context in Türkiye is essential for effective tax compliance and risk management. As Türkiye continues to adapt its framework to global standards:
- Closely monitor legislative updates and court decisions.
- Enhance awareness within the business community and among tax professionals.
- Adopt a proactive compliance strategy rather than a reactive approach.
Partner with Experts to Navigate the International Tax Context in Türkiye
Successfully managing tax compliance in Türkiye requires more than just knowledge of local laws—it demands a deep understanding of how international tax standards interact with domestic regulations. With ongoing changes in transfer pricing, digital taxation, and permanent establishment rules, having the right guidance is essential. Contact us today to learn how our team at ÖzbekCPA can support your business in aligning with global tax standards while meeting Türkiye’s compliance requirements.
