In cases where entities engage in goods or service procurements or sales from or to related persons at such costs and prices set contrary to the arm’s length principle*, earnings shall be considered to have been partially or totally distributed in a concealed manner via the transfer pricing method. Purchase and sales, production and construction, renting and leasing, lending and borrowing money,
transactions that require bonus, salary, and similar payments will, in all cases, be considered as purchase or sale of products and services.
Related person refers to the corporations’ own shareholders, any real persons related having relations with such corporations or their shareholders as well as any real persons or legal entities directly or indirectly affiliated to or controlled by a corporation in terms of management, supervision, or capital.*The arm’s length principle means that the price or amount applied in the purchase or sale of goods or services made with the related persons must be consistent with the price or amount to be applied in the absence of such a relation between them. It is obligatory to keep as evidencing instruments any records, charts, and documents related to the price or amounts determined in line with the arm’s length principle.
Transfer Pricing Methods
Comparable price method
Cost plus method
Resale price method
Transactional profit methods
Advance Pricing Agreement