The Turkish tax authorities have released the final version of the  communiqué titled “General Communiqué Regarding Disguised Profit Distribution via Transfer Pricing” originally released on July 5th, 2007 in draft form and revised on October 11th, 2007 also in draft form.  The communiqué was officially promulgated in the Official Gazette on November 18th, 2007.  The most important features of the communiqué affecting taxpayers are summarized below:

 

All corporate taxpayers are required to complete the form, “Form Relating to Transfer Pricing, Controlled Foreign Companies, and Thin Capitalization” as stipulated in Appendix 2 of the communiqué and submit to their tax office together with their corporate tax returns.  The form is intended to collect summary information on the identity of related parties, include an enumeration of related party transactions, and transfer pricing methods utilized to generate the inter-company transfer pricing policies.

 

Corporate taxpayers registered with the “Large Taxpayers Tax Office” (“LTTO”) are required to prepare annual transfer pricing documentation regarding their cross-border as well as domestic transactions with related parties.  The documentation should be prepared according to the guidelines stipulated in Appendix 3 of the communiqué.  Corporate taxpayers that are not registered with the LTTO are obliged to prepare annual documentation regarding their cross-border transactions with related parties.  These taxpayers are also required to maintain certain background documents regarding their domestic related party transactions.  In fact, the background documents in aggregate bear a resemblance to the contents of the transfer pricing documentation detailed in Appendix 3.

 

All documentation detailed above is to be prepared by the time corporate tax returns are filed, retained by the taxpayer and submitted to the tax authorities upon request.

 

Corporate taxpayers registered with the LTTO will have the right to apply for an APA beginning January 1st, 2008 and all corporate taxpayers by January 1st, 2009. Applications for unilateral (i.e., with the Turkish tax authority only) as well as bilateral and multilateral APAs are allowed.