On 6 June 2008, Act no. 5766 introducing an application fee for advance pricing agreements (APA) was published in the Official Gazette. Accordingly, an application for an APA is subject to a compulsory charge of YTL 25,000. In addition, renewal of an APA is also subject to a compulsory charge amounting to YTRL 20,000. The charge applies from the date of publication of the Act.
Restriction on scope of transfer pricing legislation
On 6 June 2008, Act No. 5766 restricting the scope of transfer pricing legislation, which has been effectively applied since 1 January 2007, was published in the Official Gazette. Accordingly, transfer pricing rules are not applied to domestic transactions between related companies unless a Treasury loss, as explained below, has occurred. The Act applies retroactively as of 1 January 2008.
Under Act No. 5766, the following transactions are not subject to transfer pricing rules, provided that there has been no Treasury loss although the prices applied on domestic transactions are not at arm's length, e.g.:
- transactions between related resident companies; and
- transactions between a resident company and a Turkish permanent establishment or representative of a related non-resident company.
"Treasury loss" refers to the total tax burden arising from a transaction effected between related parties. So long as profits are taxed in the hands of one or more related parties (i.e. there is no Treasury loss), transfer pricing legislation is not applied.