Multinational organizations and holding companies are operating in an environment of unprecedented complexity. The rising volume and variety of intercompany transactions and ever changing TP regulations, accompanied by increased enforcement and compliance activities worldwide after the BEPS initiative have made transfer pricing matters a prominent risk management issue for all kind of enterprises.
Transfer Pricing Documentation and Reporting service is provided in 3 phases:
i)Information Gathering Stage
At this stage, we focus on collecting informative and financial data for the economic analysis phase.
- In this initial stage, we would gather information on your company and group companies and related parties to develop understanding of the business as well as the intercompany transactions between affiliated entities. Afterwards, we prepare the Master File which evaluates all intercompany transactions between affiliated entities and all other related parties.
- This stage involves gathering descriptive as well as related financial information as needed. All related company contracts would be checked at this stage.
- To obtain the necessary information, we may send queries to be completed by staff who is fully aware of the operations of your company based in Turkey. We may also need to undertake interviews with persons knowledgeable about your company’s business operations in Turkey. These interviews may be conducted in person, or via tele-conferencing.
ii) Economic Analysis Stage
In this stage of our study, method selection and benchmarking exercise will be conducted.
- For all intercompany transactions, our TP study would first attempt to benchmark these using internal comparables. We will request the Company’s help in identifying internal comparables as well as background information pertaining to these transactions to assess their comparability.
- If this process yields no reliable internal comparables, we will undertake financial analyses that benchmark the returns to be realized by the seller or purchaser (depending on the selection of “best method”) against the returns earned by unrelated companies performing similar functions and operating under similar economic conditions. At this stage, we will perform public database searches (Thomson Reuters, Amadeus, etc.) to identify comparable companies and the financial results of these comparable companies would then be used to develop market benchmarks for comparison with actual intercompany charges for documentation purposes at a later stage.
iii) Documentation Stage
At this stage, we put together all the findings we discover in the first two stages of our study.
- Upon successful completion of the first two steps, we will draft our findings in the form of transfer pricing documentation report written in Turkish, as required by the Turkish Revenue Administration. This report will include following parts:
- A statement of facts/functional analysis;
- An economic analysis;
- Appendices to the core report.
In addition to TP reporting services, we also help our customers on the following issues:
- Setting up the right structure compliant with TP legislation in the formation and company restructuring phases,
- Managing the Advance Pricing agreement (APA) discussions with Turkish Revenue Administration officials concerning the determination of the right method,
- Providing consultancy to file up the attachment of the Corporate Income Tax Return “Transfer Pricing, Controlled Foreign Corporation and Thin Capitalization Form”,
- Providing consultancy to taxpayers on tax audits concerning Transfer Pricing, Controlled Foreign Corporation and Thin Capitalization issues.