Turkey's Revenue Administration has announced the publication of Presidential Decree No. 2151 of 24 February 2020, which amends the country's transfer pricing regulations. This includes the introduction of the three-tier documentation requirements of BEPS Action 13 that apply from the 2019 reporting fiscal year (beginning 1 January 2019):

• A transfer pricing report (Local file) requirement that is generally in line with existing transfer pricing documentation requirements in Turkey, which must be prepared by the tax return deadline and submitted upon request;
• A general report (Master file) requirement that applies for corporate taxpayers that are members of an MNE group and that have net assets in the balance sheet and net sales that are both at least TRY 500 million, with the Master file required to be prepared by the end of the following fiscal year and submitted upon request (content to be specified by administration and expected to be in line with OECD guidelines);
• A Country-by-Country (CbC) report requirement that applies for members of MNE groups with consolidated annual revenue of at least EUR 750 million in the previous fiscal year, which must be submitted electronically within 12 months following the end of the reporting year; and
• A CbC notification requirement, which must be initially submitted to the administration by the end of the 6th month after the Decree was published (i.e., end of August 2020) in respect of the 2019 reporting fiscal year and by the end of June following the end of subsequent reporting fiscal years.

The Decree also includes secondary CbC reporting obligations for non-parent constituent entities in Turkey in cases where:

• the ultimate parent is not required to file a CbC report in its jurisdiction of residence;
• the ultimate parent's jurisdiction has an international exchange agreement with Turkey, but not an agreement for the exchange of CbC reports; or
• there is a systemic failure for exchange.

The secondary local filing requirements also apply from 2019, although the Decree includes a final provision on documentation that indicates that the administration may extend the obligation to 2020.

In addition to the new documentation requirements, the Decree also provides for certain other amendments, including:

• A revision of the related party provisions, although the general 10% holding/ownership threshold is maintained;
• Changes in the acceptable transfer pricing methods, including a new provision that if none of the recognized methods are sufficient in determining an arm's length price, a taxpayer may use another method if it provides more accurate results, as well as a new provision on the recognition of the transitional net margin and profit split methods;
• Changes in the rules for advance pricing agreements, including:
  • a reduction in the time limit to renew an APA from at least 9 months before the APA expires to at least 6 months before;
  • an increase in the maximum duration of an APA from three years to five years; and
  • the implementation of provisions on the application of agreed methods under an APA to past periods (rollback); and
• New provisions for penalty reduction, which include 50% tax loss penalty relief provided that transfer pricing documentation obligation is fully and timely fulfilled.

The Decree entered into force on the date it was published in the Official Gazette, 25 February 2020.