An Advance Pricing Agreement Turkey is a formal agreement signed between a taxpayer and the Turkish Revenue Administration (TRA) that determines the transfer pricing method to be applied in related-party transactions in advance. This agreement provides legal certainty regarding transfer pricing matters and is rooted in Article 13 of the Corporate Income Tax Law No. 5520.
Primarily used by multinational enterprises (MNEs), APAs help reduce tax inspection risks and resolve cross-border tax uncertainties. They are especially relevant for companies with complex international supply chains or intercompany service and financing arrangements.
Why Use an Advance Pricing Agreement in Turkey?
- Tax certainty and predictability
- Decreased risk of double taxation (especially under bilateral or multilateral agreements)
- Improved relationship with tax authorities
- Reduced likelihood of tax audits and disputes
- Facilitates cross-border investment planning
In the context of increasing tax inspections in Turkey, APAs serve as a crucial shield for companies seeking transparency and compliance.
Advance Pricing Agreement Application Process in Turkey (as per 2017 Communiqué)
Pre-Filing Meeting
Before making a formal request, taxpayers may meet with the TRA to discuss the potential scope and feasibility of an Advance Pricing Agreement.
Written Application
The application must be submitted using the official form (Annex-1), along with required documents. Submissions in alternative formats are allowed if they include all necessary details.
Required Documents
- APA application form
- Functional, asset, and risk analysis
- Assumptions and justifications
- Details on intangibles and accounting systems
- Transfer pricing policy documentation
- Financial statements and contracts
- Benchmarking study with arm’s-length range
- Turkish translations (if applicable)
Review and Evaluation
The TRA reviews the methodology and supporting documentation. Incomplete applications may be rejected.
Types and Duration of Advance Pricing Agrement in Turkey
- Unilateral APA: Between the taxpayer and TRA only
- Bilateral APA: Involves both the TRA and a foreign tax authority
- Multilateral APA: Involves three or more tax administrations
An Advance Pricing Agreement in Turkey is valid for up to three years, beginning from the date agreed upon. For example, if the agreement is signed on October 5, 2025, it may cover fiscal years 2025–2027 unless otherwise determined.
What Transactions Can Be Covered?
Taxpayers may apply for an Advance Pricing Agreement regarding:
- Cross-border related-party transactions by Turkish taxpayers
- Transactions between Turkish companies and entities in free zones
- Transactions between free zone companies and non-free-zone Turkish entities
Importantly, the APA is binding only for the transactions explicitly covered within its scope.
Annual Reporting Requirements
For each fiscal year the APA is in effect, the taxpayer must submit an annual compliance report (Annex-2 and Annex-4) to the TRA along with the corporate tax return. A separate transfer pricing documentation report is not required for covered transactions.
Renewal, Revision, and Termination of Advance Pricing Agreement
RENEWAL
Must be requested at least 9 months before expiry. If conditions remain unchanged, renewal is possible under similar terms.
REVISION
May occur if:
- Assumptions are not realized
- Regulatory or economic conditions change
- The foreign authority modifies the agreement
TERMINATION
The TRA may cancel the APA if:
- The taxpayer fails to comply with agreed terms
- Misleading or incomplete information is provided
- The annual report is not submitted on time (rendering the agreement invalid from the start of that fiscal year)
Retroactive Application of Advance Pricing Agreement in Turkey
An APA can apply retroactively for open fiscal years under the statute of limitations, provided the taxpayer submits a correction return and pays the tax difference within 15 days, as per regret and remediation provisions.
APA vs. Tax Inspection in Turkey
Submitting an APA application or withdrawing it later does not automatically trigger a tax inspection in Turkey. However, having an APA also does not prevent a tax inspection entirely.
Although the agreed methodology (e.g., cost-plus method and defined profit margins) cannot be questioned, the implementation of this method remains subject to audit. Tax authorities may verify whether the taxpayer has applied the method correctly and in line with the agreement’s assumptions.
It is critical to understand that Advance Pricing Agreement procedures and tax inspections in Turkey are entirely independent processes. An audit can occur during or after APA negotiations.
Important Note: APA Is Binding Only for the Applicant
Each APA is specific to the taxpayer and transaction covered. It does not establish precedent for other companies. The TRA retains the right to revise or cancel the agreement if key transfer pricing conditions materially change.
Taxpayers may also withdraw their application before signing the agreement. However, once signed, the APA terms are binding, and failure to comply may result in tax assessment or penalties.
Reduce Tax Risks with an Advance Pricing Agreement in Turkey
In an era of heightened scrutiny on intercompany transactions, Advance Pricing Agreements in Turkey offer companies an effective risk management solution. APAs strengthen transparency, prevent disputes, and provide clarity on tax obligations — essential for both local and international businesses operating in Turkey.
💼 How We Can Help
At Metropol Partners, our team of former tax inspectors offers end-to-end support during the APA process — from pre-application consulting to submission, documentation, negotiation, and compliance reporting.
For more information, explore our Transfer Pricing Guide or contact us for a tailored assessment.