The global economy emerging in the process of digitalisation and globalisation and the integrated work of multinational enterprises with international organisations have made cross-border transactions inevitable. The increasing income needs of states after the 2008 economic crisis also accelerated the work of the OECD. The BEPS project was brought to the agenda as a result of efforts to find solutions to these challenges in response to increasing public and political concerns about the tax losses caused by multinational enterprises. BEPS action planswere developed in September 2013 with the joint work of the OECD and G20 countries. The BEPS is a joint international effort to prevent tax losses. The objective is to establish international standards for tax risks. The plan consists of 15 action plans to prevent tax practises that erode countries’ tax bases and reduce tax revenues.

Turkey’s first step towards BEPS Action plan 13 is the Presidential Decree on Amendments to Decree No. 2151 on Disguised Profit Distribution through Transfer Pricing, dated February 25, 2020. The Revenue Administration General Communiqué No. 4 on Disguised Profit Distribution Through Transfer Pricing, published on September 1, 2020. Turkish Legislation currently includes a master file, annual transfer pricing report, transfer pricing form, controlled foreign companies, thin capital, and country-based reporting (CbCR). Multinational corporate groups whose ultimate parent or proxy parent is located in Turkey submitted the CbCR on March 31, 2021, and those not located in Turkey submitted the CbCR on June 30, 2021.

Transfer pricing, the pricing of cross-border intra-company transactions between related parties, was once a term known only to a few international tax experts, but today it is the most important international tax issue faced by multinational companies worldwide. Transfer pricing is extremely important within the current international tax system because of its role in the distribution of profits between regions and its impact on multinational companies’ overall tax liabilities. Transfer pricing is an important factor that determines the profitability of the parties involved in transactions between related parties and the tax share that countries receive from such profits. Although transactions between intra-group companies located in the same country are only related to the tax revenues of the country where the transaction takes place, transactions made between different countries affect the tax revenues of more than one country, and the issue gains an international dimension, especially with globalisation. For this reason, the fight against transfer pricing must be fought on an international scale.

Action plan 13, “Transfer Pricing Documentation and Country-by-Country Reporting,” requires high-revenue multinational enterprises to report earnings, tax burden, number of employees, and retained earnings in the countries in which they do business, using standardised templates. This reporting process consists of three stages: main file, local file, and country-based reporting (CbCR). The master dossier provides an overview of the multinational business group’s global business and economic activities, including revenue distribution and transfer pricing policies. The local file provides specific information regarding transactions within a multinational business group. CbCR is an important and final stage of the action plan. This analysis reveals the branch, geographical location, income, and tax distribution of multinational enterprises.

CbCR, a key component of the BEPS project’s transparency pillar, is the obligation of all major multinational business groups with consolidated group revenues above the agreed revenue threshold to submit country-by-country reporting. CbCR, together with the other stages of the action plan—main file and local filing—completes the documentation obligations and ensures that risks related to transfer pricing and the BEPS are effectively analysed. The CbCR application reduces tax losses and evasion caused by multinational enterprises. It provides relevant countries with the necessary information flow to evaluate the contribution of multinational business groups to national welfare through tax payments. In addition, CbCR allows tax administrations to access previously inaccessible data on the local and international activities of multinational business groups, which is important in terms of increasing tax compliance and accountability.

Because of the action plan, tax administrations around theworld receive information about large foreign companies. By heading multinational business groups where no previous business existed, she improved her understanding of a group’s business structure and risk assessment capacity. In general, the ultimate parent entity (UPE) of many multinational business groups prepares and submits the CbCR to the tax administration of the country in which it is a taxpayer. This tax authority will automatically share it with CbCR tax authorities. This sharing will be carried out within the scope of the Multilateral Agreement on Mutual Administrative Assistance in Tax Matters (MAAC), Double Taxation Treaty (DTC), Automatic Exchange of Information (AEOI), and Tax Information Exchange Agreement (TIEA). A Qualified Competent Authority Agreement (QCAA) establishing the operational details of the exchange of CbCR is also necessary.

In this study, Turkey’s adaptation process and development towards Action Plan 13 were examined, considering OECD reports and current regulations. First, the concept of transfer pricing is defined, and the general framework of transfer pricing documents and CbCR are explained within the scope of Action Plan 13. Then, the development of transfer pricing documents in Turkey was examined. Finally, Turkey’s CbCR harmonisation process was examined, and the current situation was evaluated. At this point, the CbCR application has reached an advanced level. More than 110 territories now require relevant multinational business groups to submit a CbCR within their local legal framework. OECD’s publication "Country-by-Country Reporting - Compilation of 2023 Peer Review Reports" is the sixth review report prepared for the minimum standard of Action Plan 13. It covers 136 regions providing legislation and/or information on CbCR implementation. This review covers the local legal and administrative framework of each jurisdiction, the information exchange framework and the measures implemented to ensure CbCR confidentiality and appropriate use. Accordingly, a local legal framework for CbCR has been established in more than 110 regions and countries. Multilateral or bilateral competent authority agreements have been made in 89 regions/countries. 91 regions/countries were assessed by the Global Forum on Transparency and Exchange of Information for Tax Purposes assessed 91 regions/countries regarding their privacy and tax protections. A further 73 regions/countries have provided detailed information, providing sufficient assurance that measures are being taken to ensure appropriate CbCR use.

In accordance with the methodology determined in these reports, developments in the adaptation process were examined from three perspectives. These are: National legal and administrative frameworks, information exchange, and appropriate use. Reporting in Turkey started in 2019. Legal legislation for the implementation of the minimum action plan standard has been published as of 2020. Agreements for the automatic exchange of tax information have entered into force as of 2021. Information is provided explaining how to ensure appropriate use conditions for 2022. In 2023, it was confirmed that the rules did not change and continued to be implemented effectively, and additional information was provided to ensure that information exchange was carried out in a manner consistent with the job description. As a result, according to the 2022 and 2023 reports, Türkiye has fulfilled its minimum obligations within the scope of the action plan. Various recommendations are made to countries based on the deficiencies identified in as a result of the evaluations.

Various recommendations were also made in the reports. Since the necessary steps could not be taken in Turkey in 2018 and 2019, it was recommended that the national and legal administrative framework should be completed, steps should be taken to change local conditions, and bilateral agreements should be reached. As some initiatives were taken to ensure harmonisation in 2020, suggestions were made for improvements. Since the minimum conditions for ensuring national and legal administration and appropriate use were met in 2021 and 2022, no recommendation is required, but a recommendation has been given to eliminate deficiencies in information exchange. Since the rules were effectively implemented in 2023, no recommendations have been made.

Turkish legislation on the CbCR clearly provides certainty and predictability by providing taxpayers with various facilities and technical equipment. In some cases, regulations may need to be expanded to strengthen principles such as legality and predictability. On the other hand, Turkey has a long way to go in terms of information exchange, as studies on international tax exchange agreements are insufficient and the agreement network needs to be expanded. Although the exchange of information on tax matters existed before Action Plan 13, it was not used as effectively as it is now. Information exchange agreements play an important role in ensuring transparency in the international arena. Therefore, by increasing international information exchange agreements, transparency will be ensured and possible tax losses will be prevented.

Although Turkey generally includes the minimum standards of the action plan in i digitalisation is legislation, there are differences in practise at a few points. These differences mainly relate to definitions, timeliness, and the legal basis for the use of CbCR information. As a result, Türkiye has largely complied with the action plan. However, more efforts are needed to expand international information exchange agreements and bring them closer to global standards. In addition, it would be beneficial for CbCR to be addressed in more detail in domestic legislation and to increase the scope of its work to increase international information exchange.