Recent guidance issued by the Turkish Revenue Administration sets out the procedures to be followed when a taxpayer invokes the mutual agreement procedure (MAP) under one of Turkey’s tax treaties.

The MAP can be invoked when a resident of a contracting state considers that it is subject to taxation not in accordance with the provisions in a tax treaty or there is an issue relating to the application or interpretation of the treaty. Under the MAP, the taxpayer can request that the competent authorities of the treaty partner countries endeavor to resolve the issue. Notably, remedies under the MAP are provided in addition to the ordinary administrative and judicial remedies available to the taxpayer under the domestic tax laws of its country of residence.

The recent guidance mainly covers the following topics:

  • General features of the MAP;
  • Circumstances under which the MAP may be invoked;
  • Procedure for initiating the MAP, documentation requirements and time limits; and
  • Procedure under treaties and resort to remedies under domestic law.

The competent authority for Turkey is the EU and Foreign Affairs Department of the Revenue Administration.

The guidance reiterates the general rules that, where a resident taxpayer considers that the actions of a treaty partner state result, or will result, in double taxation, it may present its case in writing to the competent authorities of the the country where it was resident at the time of the relevant actions or decision. In addition, persons who are not a citizen of either contracting state but that are exposed to double taxation also may apply to the competent authority of their country of nationalty. For example:

  • A Turkish resident that derives income from France may apply to the Turkish competent authority;
  • A Turkish citizen who is a tax resident in Spain may present its case to the Turkish competent authority with respect to unfavorable tax treatment in Belgium; and
  • A Turkish citizen who is a tax resident in Italy may apply to the Turkish competent authority in respect of potential discriminatory taxation in Italy.

A taxpayer may request a MAP in the following circumstances:

  • The taxpayer considers that the actions of one or both of the Contracting States result or will result in taxation not in accordance with the provisions of the treaty;
  • Issues arise with respect to the interpretation or application of the treaty; and
  • Double taxation in cases not otherwise provided for in the treaty.

The MAP is frequently invoked to resolve issues relating to the determination of business income, residence, the existence of a permanent establishment and transfer pricing issues. The guidance provides that a request for the MAP must be submitted to the competent authority within the period specified in the relevant treaty (the guidance includes a table setting out the relevant time limits for all of Turkey’s treaties). If the treaty is silent, the time limits will be determined in accordance with the legislation of the Contracting State where the applicant is resident. In general, the taxpayer is required to apply to initiate the MAP between one and five years following the date of the unfavorable action resulting in excess taxation.

A taxpayer requesting the MAP must present a detailed “information form” to the competent authorities that sets out the issue(s), parties involved, period and calculation method, etc., of the unfavorable action. Once the competent authorities receive the request, they will examine the application and communicate directly with each other with a view to settling the case. If the dispute is settled between the competent authorities, the taxpayer has the option to accept or reject the resolution: the guidance specifically states that the mutual agreement of the competent authorities is not binding on taxpayers. If the taxpayer rejects the proposed resolution, it may pursue ordinary legal remedies under domestic law, taking into account any applicable statute of limitations. Unlike a resolution by the competent authorities, any decision by a court will be considered final and binding on the taxpayer.

M. Ufuk Sogutluoglu (Istanbul)


Deloitte Turkey

+90 (212) 366 6000

H. Arman Gezer (Istanbul)

Senior Manager

Deloitte Turkey

+90 (212) 366 6000