Date: 26 June 2014

Publisher: TerraLex


The Legal Ground of Transfer Pricing

Pursuant to Article 13 of the Corporate Income Tax Code (“CIT Code”) (Law No. 5520) (published in the Official Gazette dated June 21, 2006, No. 26205), in case corporations purchase or sell goods and services from and to related parties at value and price contrary to the arm’s length principle, the profit shall be deemed to have been distributed in whole or in part in a disguised manner through transfer pricing.

The transactions of purchasing, selling, manufacturing and construction, renting to and from, lending and borrowing money, transactions that require payments such as wages and bonus shall, under all circumstances, be deemed as the purchase and sale of goods and services.

The Concept of Related Party

The concept of related party is defined under Article 13/2 of the CIT Code. According to this article, related party means the following: shareholders of the corporation; the natural persons or corporations that the corporations or their shareholders are associated with; or the natural persons or corporations the administration, supervision or the capital of which depend directly or indirectly on them or which are under their influence. Spouses of the shareholders, ancestors and descendants of the shareholders or their spouses, as well as their other relatives by consanguinity or affinity of third degree or less, are considered related parties.

On the other hand, any and all kinds of transactions performed with the persons living in the countries or regions that are announced by the Council of Ministers, upon considering the identity of their taxation capacity and the level of taxation of their system with the taxation capacity created by the Turkish tax system, and the availability of exchange of information, may be deemed to have been performed with the related parties.

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Expertise: Tax

Tax Team Leader – Ahmed Pekin


Pekin & Pekin 10 Lamartine Caddesi Taksim 34437 Istanbul Turkey T: +90 212 313 3500 F: +90 212 313 3535 E: