Tax Certification and Reporting Services
The scope of the services relating to certification of the corporate income tax return and personel income tax return and its attachments by Sworn-in Certified Public Accountants (CPAs), briefly called as “tax certification services” has been defined in the Law No. 3568 concerning “Certified Public Accountancy and Sworn-in Certified Public Accountancy” and related communiqués.
In the aforementioned law, the objective of tax certification to be carried out by Sworn-in CPAs has been defined as to review whether or not the payable corporation tax has been calculated correctly, certify and ensure such correct calculation, and it has been stated that the tax inspectors shall primarily inspect the accounts of those taxpayers that have not had their corporation tax returns and their attachments been audited by a Sworn-in CPA.
Tax certification work basically covers the following;
- Review all kinds of books, accounts, records and transactions and related substantiating documents to determine whether or not the taxes payable by the taxpayer, primarily the corporate income tax, advance tax (temporary corporate income tax) and dividend withholding are calculated and paid in the manner compliant with the tax legislation,
- Review whether or not the statutory books are kept in accordance with the Accounting Systems Applications General Communiqué and other related accounting standards and policies,
- Determine the errors or omitted issues during fulfillment of tax liabilities and the measures to be taken for elimination of such errors and omissions,
- Determine the tax incentives and advantages, as well as accounting policies that the Client may benefit from while fulfilling its tax liability.
- Audit of the statutory accounts to check compliance with the Turkish Procedural Tax Code,
- Check the statutory books and documentation in compliance with the Turkish Procedural Tax Code,
- Compliance check visits on a quarterly basis to ensure the correctness of advance corporation tax return filing,
- Check of disallowable and deductible expenses for the purpose of the proper determination of the corporate income tax base,
- Control the accuracy of year-end calculations and valuations which affect the determination of corporate income tax liabilities (inflation accounting applications (if any), depreciation, valuations of foreign currency denominated assets and liabilities, determination of disallowable expenses etc.),
- Check the accuracy of the annual corporate tax return and its attachments,
- Submit the tax compliance report prepared by Sworn-in CPA to the tax office.
VAT Refund Certification Services
VAT refund certification services (“KDV İade Tasdik Hizmeti” in Turkish) which are to be carried out in accordance with Law No. 3568 and relevant legislation, generally comprise the following;
- Check the accuracy of the refundable VAT amount based on the statutory records and relevant legislation.
- Preparations of the VAT refund certification report to be submitted to the relevant tax office.
The scope of VAT refund certification services comprises the followings;
- Determine the legal framework of the VAT refund regarding the sales transactions,
- When necessary, point references regarding related tax regulations (i.e. the list of documents required by tax administration in accordance with tax legislation during the VAT application to etc.) at the VAT refund stage,
- Perform cross investigations for the supplier firms of the relevant company,
- Prepare VAT refund certification report,
- Make necessary correspondence with the tax office regarding VAT Refund Tax Certification Report,
- Checking the accuracy of VAT correction returns while refunding incurred VAT.
Visit the Tax Office with Client, discuss with the authorities when required and to provide finalization of the VAT refund files
Special Consumption Tax Refund Certification Services,
Special Communication Refund Certification Services.
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.
- Investment Tax Credits,
- Tax Exemption in Transactions Generating FX Revenues,
- Revaluation (including inventories),
- Revenue Exemption Generated From Education, Sport and Healthcare Investments,
- Incentives and Tax Credits Regarding Research&Development (R&D) Activities,
- Granting Tax Exemption to Associations, Charities and Cooperatives,
- Transactions Related With Other Incentives, Allowances and Exemptions.