Turkey

Corporate taxation

The corporate tax rate is

2013 20.00%
2014 20.00%
2015 20.00%
2016 20.00%
2017 20.00%
2018 22.00%
2019 22.00%
2020 22.00%
2021 25.00%
2022 23.00%
2023 20.00%

Companies are subject to a standard tax rate of 20%. However the rate has temporarily been increased to 25% for the income generated in 2021 and to 23% for the income generated in 2022. The applicable rate as of 2023 will return to 20%, unless the legislation is amended.

For companies in the financial sector the corporate income tax rate is 25%.

Resident companies are liable to corporate income tax on there worldwide income. Non-resident companies are liable to corporate income tax on there Turkish-source income only.

Transfer pricing

Transfer pricing are regulated under Article 13 of the Corporate Income Tax Law with the title ‘Disguised Profit Distribution through Transfer Pricing’.
Article 13 follow the arm’s-length principle, established by OECD Transfer Pricing Guidelines, and are applicable to all financial, economic, commercial transactions and employment relations between related parties. Details on the application of Article 13 are provided in a communiqué regarding disguised profit distribution through transfer pricing.
According to the law, related parties must set the transfer prices for the purchase and sales of goods and services as they would have been agreed between unrelated parties.

Related party definition of the Turkish Transfer Pricing regulations is very broad and it includes direct or indirect involvement in the management or control in addition to the existence of shareholder/ownership relationship. In addition to transactions with foreign group companies, it also includes transactions with entities that are based in tax havens or in jurisdictions that are considered to be harmful tax regimes by the Turkish government.

Links

Transfer Pricing Case Law

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