The corporate tax rate is 20%. A resident company is liable to corporate income tax on its worldwide income. A non-resident company is liable to corporate income tax on its Turkish-source income only. For FY2017 Corporate Income Tax Returns, the government has announced a 5% reduction of corporate tax due up to TL 1 million for corporate income tax payers who perform regular tax payments.
Transfer pricing are regulated under Article 13 of the Corporate Income Tax Law with the title ‘Disguised Profit Distribution through Transfer Pricing’.
The regulations under 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.