On 7 March 2025, the Turkish Revenue Administration announced on its website that, at this stage, Amount B will not be applied to the transactions of distributors, sales agents or intermediaries operating in Turkiye.

Background

Pillar One, the first pillar of the two-pillar approach that emerged as a result of studies conducted within the scope of the Organisation for Economic Co-operation and Development's (OECD) Base Erosion and Profit Shifting (BEPS) project, aims to more fairly tax the profits of multinational enterprises (MNEs) in the digital economy.

Amount B aims to (1) simplify the application of the arm's-length principle for core marketing/sales and distribution activities in the source countries in which the MNEs and their affiliated enterprises operate, (2) reduce disputes and (3) increase standardization.

The first phase of the studies related to Amount B was completed with a report published on the OECD website on 19 February 2024, the contents of which were included in the "OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations." According to this report, Amount B has been developed as an optional treatment to be applied for accounting periods beginning on or after 1 January 2025. Countries may choose to apply Amount B for covered transactions of distributors, sales agents and intermediaries operating in their country for accounting periods beginning on or after 1 January 2025.

Announcement

The announcement of the Revenue Administration states that Turkiye's commitment to Amount B applies only to jurisdictions with which it has an active tax treaty as of the date the Amount B's definition is approved by the Inclusive Framework. This means that Turkiye will not acknowledge the implementation of Amount B in any jurisdiction lacking a valid bilateral tax treaty with Turkiye.

Implications

MNEs with business interests in Turkiye should consult their tax advisors to assess the impact of this decision on their transfer pricing strategies. Because Turkiye will continue to rely on traditional benchmarking studies rather than the standardized profit margins under Amount B, businesses operating in Turkiye may face increased compliance burdens and potential disputes compared to jurisdictions that adopt Amount B. Additionally, MNEs with operations in multiple jurisdictions should consider how Turkiye's stance may affect their global transfer pricing policies and tax treaty planning.