What is Turkish transfer pricing?
Transfer Pricing (Transfer Fiyatlandırması) is the Turkish tax framework regulating prices charged between related parties (intra-group transactions), governed by 5520 sayılı Kurumlar Vergisi Kanunu (KVK) Madde 13 and the implementing Transfer Fiyatlandırması Yoluyla Örtülü Kazanç Dağıtımı Hakkında Karar. Turkey adopts the OECD arm’s-length principle: transactions between related parties must be priced as if conducted between independent parties. Non-compliant pricing results in “örtülü kazanç dağıtımı” (concealed profit distribution) with KVK Madde 11 disallowance plus penalties.
Related party definition (KVK m.13/2)
- Shareholding: direct or indirect 10%+ ownership.
- Management control: board representation, voting control.
- Family relationships: spouse, blood relatives up to third degree.
- Common shareholders: entities under common ultimate ownership.
- Tax havens (vergi cenneti): all transactions with low-tax jurisdictions deemed related-party regardless of actual relationship: extra documentation burden.
Accepted methods (OECD-aligned)
- Comparable Uncontrolled Price (KFY): direct market comparison.
- Resale Price Method (Yeniden Satış Fiyatı): for distribution transactions.
- Cost Plus Method (Maliyet Artı): for manufacturing/services.
- Profit Split Method (Kâr Bölüşüm): for highly integrated operations.
- Transactional Net Margin Method (İşlem Net Marj): most commonly used in practice.
Documentation requirements
- Master File: for groups exceeding consolidated revenue threshold.
- Local File: Turkish entity-specific documentation, prepared by Kurumlar Vergisi declaration deadline.
- Country-by-Country (CbC) Report: for multinational groups above EUR 750M threshold; submitted via GİB.
- Annual TP Form: attached to corporate tax declaration summarising intra-group transactions.
Transfer pricing in startup groups
KVK art. 13’s arm’s-length requirement reaches startup structures earlier than founders expect: the moment a flip-up creates a US topco buying development services from the Turkish OpCo, every intercompany flow: service fees, IP licences or transfers, management charges, intercompany loans: needs a defensible price and, above thresholds, documentation. The flip-up’s sharpest TP moment is the IP migration: transferring core IP to the holdco at a nominal price invites both Turkish tax exposure (hidden profit distribution) and later US questions about basis. The startup-sized program: a cost-plus services agreement with a benchmarked markup, written intercompany agreements signed before the flows start, annual documentation where thresholds bite, and revisiting the model when functions actually move between entities.
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