Turkey's Revenue Administration has announced the publication of amendments to the General Communiqué on Disguised Profit Distribution via Transfer Pricing. The main amendments concern updated transfer pricing documentation requirements, including details on the new general report (Master file) and Country-by-Country (CbC) reporting requirements.

Master File

The Master file requirement 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. The Master file is required to be prepared by the end of the fiscal year following the relevant fiscal year and must be submitted upon request. Corporate taxpayers subject to the requirement are also allowed to submit a Master file prepared on behalf of the group by a group member abroad. If prepared in a foreign language, a Turkish translation is also required. Further, if multiple group members in Turkey are subject to the requirement, a single Master file may be prepared for all members, provided that the Turkish group members for which the Master file is prepared is clearly stated in the Master file.

The first Master file must be prepared by 31 December 2020 for the 2019 fiscal year and, if requested after this date, must be submitted. Taxpayers following a non-calendar year must prepare the first Master file for the fiscal year starting after 1 January 2019. The content of the Master file is in line with OECD guidelines, including information on the organizational structure, the group business activities, the intangible assets held by the group, intra-group financial transactions, and the financial and tax situation of the group.

CbC Report

The CbC reporting requirements apply for members of MNE groups with consolidated annual revenue of at least EUR 750 million in the previous fiscal year. Non-parent constituent entities are also required to submit a CbC report if the revenue threshold is met in cases where:

• there is no CbC reporting requirement in the country where the ultimate or surrogate parent is resident;
• there is a CbC reporting requirement in the country of residence and there is an international agreement between Turkey and such country, but there is no competent authority agreement for the exchange of CbC reports (international agreement means Mutual Assistance Convention or other tax information exchange agreement); or
• there is a CbC reporting requirement and a competent authority agreement, but there is a systemic failure for exchange.

When required, the CbC report must be submitted electronically within 12 months following the end of the reporting fiscal year in XML format using the Revenue Administration Information Transfer System (BTRANS). The first CbC report must be submitted for the 2019 reporting fiscal year by 31 December 2020. Where a non-calendar year is followed, the first CbC report must be prepared for fiscal years starting after 1 January 2019.

A CbC notification is also required to be filed electronically via the "Internet Tax Office" by the end of June of the year following the reporting year, which requires users to register for a user code and password. Where financial statements have not yet been prepared for the reporting year by that date, an additional extension may be applied for. For the first year, however, a general extension to 30 October 2020 is provided for submitting the notification.

Copies of the general form for CbC notifications and reports are provided in an annex to the update.