By way of Decree No. 2008/13490 on transfer pricing, published in the Official Gazette of 13 April 2008, the Council of Ministers extended the scope of advanced pricing agreements (APAs) and transfer pricing documentation. The Decree enters into force on 1 January 2009.

APAs

Currently, corporate taxpayers registered with the tax office for large-scale taxpayers in Istanbul are eligible to enter into an APA with the tax administration only for their transactions with non-residents (foreign transactions).

All corporate taxpayers that do not conduct business in free-trade zones will be eligible to apply for an APA regarding their transactions with related corporate taxpayers conducting business in free-trade zones, or vice versa. Accordingly, from 1 January 2009, all corporate taxpayers may apply for an APA regarding their foreign transactions, as well as transactions with related parties established in free zones.

Documentation

Currently, corporate taxpayers registered with the tax office for large-scale taxpayers in Istanbul are required to prepare an annual transfer pricing report only for their foreign and domestic transactions realized with related parties. Other corporate taxpayers, however, are required to prepare their annual report only for their foreign transactions.

As of 1 January 2008, the Decree extended the scope of transfer pricing documentation. Accordingly, all corporate taxpayers must include the transactions with related parties conducting business in free zones in their annual transfer pricing reports. Additionally, corporate taxpayers conducting business in free zones must prepare an annual transfer pricing report for their domestic transactions conducted with related parties.