As known, Presidential Decree No. 2151, which was published in the Official Gazette dated 25.02.2020 made significant changes in the transfer pricing legislation. In this scope, Master File and Country-by-Country Reporting (“CbCR”) obligations were imposed in addition to the local transfer pricing report (“local file”) within the framework of the three-stage transfer pricing documentation adopted within the scope of OECD BEPS. Our explanations on the subject were included in the Guide we prepared in the form of a Question and Answer.
“General Communiqué No 4 on Disguised Profit Distribution by Way of Transfer Pricing” was published on the Official Gazette dated 01.09.2020 explained some issues as follows:
- Related person definition regarding the situations where the relationship occurs directly or indirectly through the partnership
- Operational profit methods added to the methods used to determine the arm’s length price or value
- Advance Price Agreements (APA)
- Transfer Pricing Documentation obligations,
- Penalty application for taxpayers who fulfill their certification obligations fully and on time,
- Intra-group services
The issues determined by the Presidential Decree are fully reflected in the General Communiqué on Disguised Profit Distribution via Transfer Pricing. The General Communiqué also postponed the date of filing notification for CbCR of multinational groups to 30.10.2020. The notification will be given electronically via Internet Tax Office until that date.
However, the first application of the CbCR for the 2019 accounting period which would be prepared and submitted to tax administration electronically until the end of the twelfth month following the reported accounting period must be done until 31.12.2020. In case of being subject to the special accounting period, the first country-by-country report should be prepared for the accounting period starting after 01.01.2019 and submitted to the tax administration electronically until the end of the twelfth month following the end of the relevant special accounting period. As a consequence, it is understood that there is no postponement regarding the country-by-country reporting date.
On the other hand, consolidated financial statements will be taken into consideration in accordance with Turkey Financial Reporting Standards, Financial Reporting Standards for Large and Medium-Sized Enterprises, International Financial Reporting Standards, or other accounting and financial reporting standards in force in the country concerned, while determining CbCR obligations.
Multinational enterprises must fill and send electronically “notification filing for country-by-country reporting” on whether they are the ultimate parent company or which company will report on behalf of the group and information about the fiscal period each year, in accordance with Annex-5 and the explanations of the Internet Tax Office until the end of June of the year following the reporting period. Multinational company groups that have not yet been formed their consolidated financial statements of the previous fiscal period as of these dates may apply tax administration for an additional period for notification with a petition explaining this issue.
Covered taxpayers are required to obtain a user code and password from the tax office in which they are affiliated. Printed form (by hand or by mail) will not be accepted. In order for the notification form to be deemed to be given electronically, it is necessary to make an approval process through the Internet Tax Office.
The tables prepared in accordance with the content in Annex-6 regarding the country-by-country reporting will be filled in in accordance with the explanations in the Revenue Administration Information Transfer System (BTRANS) application and will be sent electronically in xml format. BTRANS application on the website of the Revenue Administration will be used for submission. In order to send data through BTRANS, taxpayers must first obtain a user code and password. A petition with a signature must be sent to the Application and Data Management Department of the Revenue Administration in order to request a user code and password. In these petitions, taxpayers must indicate what purpose they will transfer the data. The user code will include appropriate definitions for the data format they will use for transferring the data.
Annex-5 “Notification Form for Country-by-Country Reporting” and Annex-6 “Country-by-Country Report” can be sent by the taxpayer or by the independent accountant financial advisor or by sworn financial advisor who services the taxpayer for full certification services.
Country-based reports prepared multinational enterprises whose ultimate parent company is in Turkey and automatic exchange of information within the scope of multilateral agreements will be announced by the tax administration later.
On the other hand, it has been explained that the purchase of goods and services which does not exceed TRY 30.000 for each related company is not necessary to be included on “the form regarding transfer pricing, controlled foreign company, and disguised capital” which must be filled as an annex to annual corporate tax return of taxpayers.