How are related-party imports valued by Turkish customs? Learn the rules on transaction value, intercompany pricing, transfer pricing, royalties, year-end adjustments, customs penalties, post-clearance audits and compliance risks in Turkey.

Related-party imports into Turkey are one of the most important customs compliance areas for multinational companies, foreign investors and Turkish subsidiaries purchasing goods from parent companies, sister companies or other members of an international corporate group. The fact that the buyer and seller are related does not automatically prevent the invoice price from being accepted as the customs value. However, Turkish customs authorities may examine whether the corporate relationship influenced the price and whether other payments connected with the imported goods should have been included in customs value.

Under Customs Law No. 4458, the transaction value is generally the starting point for determining the customs value of imported goods. The Ministry of Trade explains that the transaction value is the price actually paid or payable for goods sold for export to Turkey, subject to the adjustments required under the Customs Law and Customs Regulation.

Importantly, the Ministry expressly states that the existence of a relationship between buyer and seller is not, by itself, sufficient reason to reject the transaction value. Customs authorities must examine the circumstances surrounding the sale and determine whether the relationship influenced the price.

This distinction is fundamental for multinational companies importing into Turkey.

What Is a Related-Party Import in Turkey?

A related-party import generally occurs when goods are imported into Turkey through a transaction between persons or companies considered related under the applicable customs valuation rules.

Common examples include a Turkish subsidiary purchasing goods from its foreign parent company, a Turkish distributor importing products from another subsidiary within the same multinational group, a Turkish manufacturing company purchasing components from a foreign sister company, or a Turkish group company buying machinery from another entity controlled by the same parent.

However, customs legislation contains its own definition of when persons are regarded as related.

According to the Ministry of Trade, circumstances establishing a relationship can include situations where the parties are officers or directors of one another’s businesses, legal partners, employer and employee, where at least 5% of voting shares or capital of both companies is directly or indirectly owned or controlled by the same persons, or where one person directly or indirectly controls the other. Common control by a third person can also create the relevant relationship.

Consequently, companies should not assume that the definition of a related party used for corporate tax purposes is necessarily identical to the customs-law definition.

Are Related-Party Import Prices Automatically Rejected by Turkish Customs?

No.

This is one of the most important principles in Turkish customs valuation.

The Ministry of Trade expressly states that the mere existence of a relationship between the buyer and seller is not sufficient to reject the declared transaction value.

Instead, customs authorities may examine the circumstances surrounding the sale.

If the relationship did not influence the price, the transaction value can potentially remain acceptable.

This is particularly important for multinational companies because a Turkish subsidiary does not automatically lose the right to use transaction value merely because its supplier is its foreign parent company.

What Happens If Customs Believes the Relationship Influenced the Price?

The customs administration may investigate the pricing arrangement.

According to Ministry guidance, where customs authorities conclude from information supplied by the declarant or other sources that the relationship may have influenced the price, the grounds for that concern are communicated to the declarant in writing.

The Ministry states that the declarant has a right to respond within 15 days from notification.

This period can be extremely important.

The importer should use the opportunity to provide commercial and financial evidence demonstrating why the declared price is genuine and why the corporate relationship did not artificially reduce the customs value.

How Can a Company Prove That Its Related-Party Price Is Acceptable?

Evidence depends on the group’s commercial structure.

Relevant documentation may include the intercompany sales agreement, pricing policy, invoices, purchase orders, payment records, transfer-pricing documentation, comparable third-party sales, product price lists and evidence explaining the functions performed by the Turkish subsidiary.

The Ministry also recognizes certain test values.

Where the importer demonstrates that the related-party transaction value closely approximates qualifying values involving identical or similar goods, this may support acceptance of the transaction value. Relevant comparisons can include sales to unrelated buyers and values determined under specified alternative customs valuation methodologies.

However, comparisons must be commercially meaningful.

Differences in quantity, commercial level, transportation arrangements and other relevant factors may need to be adjusted.

Is a Transfer Pricing Report Enough?

Not necessarily.

This is a common mistake among multinational companies.

A transfer-pricing report may demonstrate that intercompany pricing complies with the arm’s-length principle for Turkish corporate tax purposes.

Article 13 of Corporate Tax Law No. 5520 generally addresses transactions between related parties that are priced inconsistently with the arm’s-length principle. Turkish Revenue Administration materials describe the principle by reference to the price that would have arisen between independent parties.

But customs valuation is governed by a different statutory framework.

A transfer-pricing report may therefore be useful evidence without necessarily proving the customs value.

The company should conduct a customs-specific valuation analysis.

Why Can Transfer Pricing and Customs Valuation Produce Different Results?

The two regimes serve different purposes.

Corporate transfer pricing primarily addresses allocation of income and expenses between related companies.

Customs valuation determines the value of imported goods for customs purposes.

For example, a multinational group may design its transfer-pricing system so that its Turkish distributor earns a target operating margin.

That system might be perfectly reasonable for transfer-pricing purposes.

However, Turkish customs may still ask whether particular royalties, tooling costs, assists or other payments should have been added to the customs value of imported goods.

A multinational company therefore needs to comply with both regimes independently.

What Is the Transaction Value Method?

Transaction value is generally the first customs valuation method.

The Ministry defines it as the price actually paid or payable for goods sold for export to Turkey, adjusted where required under Customs Law No. 4458 and the Customs Regulation.

However, certain conditions must be satisfied.

One relevant condition concerns the relationship between buyer and seller.

Where they are related, the transaction value may still be accepted where the requirements governing related-party transactions are satisfied.

The company should therefore avoid assuming that customs authorities can simply replace the declared invoice price with another value because they consider it “too low.”

Can Turkish Customs Arbitrarily Determine a Higher Value?

No.

Turkish customs valuation legislation establishes a hierarchy of valuation methods.

The Ministry identifies six methods: the transaction value method, transaction value of identical goods, transaction value of similar goods, deductive or unit-price method, computed-value method and fallback method.

The transaction value method is considered first.

Where it cannot legally be applied, the subsequent methods are considered according to the statutory sequence, subject to the limited possibility of changing the order of the deductive and computed-value methods upon an accepted written request by the declarant.

The fallback method also cannot be based on arbitrary or fictitious customs values.

This procedural hierarchy can become an important defense in customs valuation disputes.

What Payments Must Be Added to the Related-Party Invoice Price?

The invoice price is not necessarily the final customs value.

Under the transaction-value methodology, specified elements may need to be added where they have not already been included.

The Ministry identifies, among other things, certain commissions and brokerage, container and packing costs, specified assists supplied by the buyer, qualifying royalties and licence fees, certain proceeds of subsequent resale accruing to the seller, and transportation and insurance costs up to the relevant place of entry into Turkey.

These additions must be based on objective and quantifiable data.

For multinational groups, this means the customs department needs visibility beyond the commercial invoice.

Why Are Royalties Particularly Risky?

Consider a multinational brand structure.

A Turkish subsidiary imports branded products from Company A in Germany but pays a trademark royalty to Company B in another jurisdiction.

The invoice from Company A may be entirely genuine.

Nevertheless, the royalty paid to Company B may potentially affect customs value if the statutory requirements are satisfied.

According to the Ministry, royalties and licence fees are added where they relate to the imported goods and must be paid directly or indirectly as a condition of sale, provided they have not already been included in the price actually paid or payable.

Therefore, the fact that the royalty is paid to a company other than the seller does not mean that it can automatically be ignored.

Are All Royalty Payments Included?

No.

The legal conditions must be examined individually.

The Ministry specifically notes that payments for the right to distribute or resell imported goods are not added where those payments are not a condition of the sale for export to the importing country.

Consequently, the customs treatment of a royalty should be determined by examining the actual licence agreement, relationship between the parties and commercial conditions surrounding the import transaction.

The title placed on the payment is not enough.

What Are Assists?

Assists are another significant compliance risk in related-party manufacturing structures.

A Turkish buyer may supply goods or services to the foreign manufacturer free of charge or below cost for use in producing imported goods.

The Ministry identifies relevant categories including materials and components incorporated into imported goods, tools, dies and moulds used in production, materials consumed during production, and certain engineering, development, artwork, design work, plans and sketches undertaken outside the importing country and necessary for producing the imported goods.

An appropriate portion of the value of qualifying assists may therefore need to be included in customs value.

What About Intercompany Management and Service Fees?

These payments require careful analysis.

Multinational companies commonly make intercompany payments for management, procurement, engineering, IT, marketing, quality-control or administrative services.

Not every service payment belongs in customs value.

But the company should determine what the payment actually represents and whether it falls within one of the statutory elements affecting the price actually paid or payable.

A company cannot safely determine customs treatment merely by naming an invoice “management services.”

The underlying economic substance and contractual arrangements should be examined.

How Do Year-End Transfer Pricing Adjustments Affect Related-Party Imports?

This is one of the most difficult compliance issues for multinational companies.

Suppose a Turkish distributor imports EUR 20 million of products from its foreign parent during the year.

At year-end, the group’s transfer-pricing policy determines that the Turkish subsidiary’s operating margin is too high. An additional EUR 2 million debit is therefore issued by the parent.

The customs question becomes whether that additional payment relates to the previously imported goods.

If it does, customs authorities may investigate whether the historical customs values should be adjusted.

The company should therefore conduct a customs analysis before, rather than after, material transfer-pricing adjustments are posted.

Can a Downward Adjustment Reduce Customs Value?

Potentially, but the result should not be assumed.

If a foreign related supplier issues a credit note reducing the ultimate purchase price of goods already imported into Turkey, the importer may consider whether the customs value was originally overstated.

However, customs refunds and post-import price adjustments are governed by their own rules.

A transfer-pricing credit note does not automatically create a right to recover customs duties.

The legal and factual relationship between the adjustment and imported goods must be examined.

Can Related-Party Imports Be Audited After Customs Clearance?

Yes.

Customs valuation can be examined through post-clearance controls.

This is particularly important for multinational companies because related-party pricing practices tend to be systematic.

If customs authorities conclude that an omitted royalty, year-end adjustment or other payment should have been included in customs value, the issue may affect many previous declarations rather than only one shipment.

A company facing a valuation question concerning one import should therefore immediately determine whether the same pricing methodology was used historically.

What Are the Administrative Penalties for Incorrect Customs Value?

Customs valuation errors can produce significant financial exposure.

According to Ministry guidance, where examinations demonstrate that the declared value of goods subject to ad valorem duties is deficient compared with the value determined under Articles 23–31 of Customs Law No. 4458, Article 234/1(b) provides for collection of the deficient customs duties together with an administrative fine equal to three times the duty difference, subject to the statutory qualifications and exceptions.

The Ministry further explains that certain differences below 5% and deficiencies resulting from formal calculation errors are treated differently under the provision.

For multinational companies importing hundreds of millions of lira worth of products annually, a systematic valuation problem can therefore generate substantial exposure.

Can a Related-Party Valuation Problem Become a Criminal Case?

Potentially, but an incorrect related-party price does not automatically constitute a criminal offence.

The Ministry’s customs valuation guidance expressly notes that the provisions of Anti-Smuggling Law No. 5607 remain reserved alongside the Article 234 penalty framework.

Criminal risk becomes more serious where authorities allege intentional customs evasion, false invoicing, concealed payments, double invoicing or deliberate manipulation of the declared customs value.

A genuine dispute concerning whether a related-party relationship influenced the price should not automatically be treated as customs fraud.

The distinction between a technical valuation disagreement and intentional deception can therefore become central to the defense.

Can Company Directors Face Personal Risk?

Potentially, where a customs matter develops into a criminal investigation and evidence allegedly connects particular individuals with intentional misconduct.

However, merely being a director of the Turkish subsidiary should not automatically establish personal criminal responsibility.

The investigation should determine who designed the pricing structure, who knew about additional payments, who communicated with the customs broker and who approved the customs declarations.

Foreign directors with no operational role in Turkish customs procedures may have materially different positions from employees directly responsible for the disputed transactions.

What Should the Customs Broker Know?

A customs broker cannot accurately evaluate customs value if the importer provides only the commercial invoice while withholding information about the broader group structure.

Where relevant, the company should ensure that customs compliance personnel have access to information concerning royalties, licence agreements, tooling, assists, transfer-pricing adjustments and other payments potentially connected with imported goods.

This does not mean sending every corporate document to the customs broker.

It means creating an internal compliance process capable of identifying payments that require customs analysis.

What Documents Should Multinational Companies Keep?

Companies should be able to reconstruct the commercial transaction years after importation.

Relevant records commonly include intercompany sales agreements, commercial invoices, purchase orders, bank payments, transfer-pricing reports, pricing policies, royalty agreements, licence agreements, management-service agreements, debit and credit notes, customs declarations and correspondence with customs brokers.

Where the group uses benchmark studies or comparable third-party transactions to support its pricing, those records should also be preserved.

Turkish Revenue Administration guidance similarly emphasizes keeping records and documents supporting arm’s-length pricing in related-party transactions.

What Is a Related-Party Customs Valuation Health Check?

Multinational companies with significant imports into Turkey should periodically compare customs declarations against their broader intercompany financial records.

The review should identify payments to foreign group companies that do not appear on import invoices.

Particular attention should be given to royalties, licence fees, year-end transfer-pricing adjustments, free tooling, engineering costs, management charges, rebates, credit notes and retrospective pricing adjustments.

The company should then determine whether any of these amounts potentially affect customs value.

This type of review can identify a systematic compliance problem before Turkish customs authorities do.

What Should Companies Do If Customs Challenges the Related-Party Price?

The importer should first determine why customs believes the relationship affected the price.

The company should obtain the written notification and record all procedural deadlines.

It should then prepare evidence supporting the commercial basis of the price.

Comparable transactions, intercompany agreements, pricing methodologies and transfer-pricing documentation may all be useful.

However, the defense should be framed under customs valuation law, not merely corporate transfer-pricing principles.

Where authorities reject transaction value, the company should also examine whether the administration correctly followed the statutory hierarchy of alternative valuation methods.

Can the Customs Assessment Be Challenged?

Potentially, yes.

Customs assessments and administrative penalties may be subject to administrative objection and subsequent judicial review under the applicable Turkish customs and procedural legislation.

Deadlines are critical.

The importer should not spend weeks negotiating informally with its customs broker while allowing the statutory objection period to expire.

The legal challenge should address both the customs value and any administrative penalty imposed because the two issues may involve separate legal arguments.

Related-Party Import Compliance Checklist

Before significant related-party imports into Turkey, multinational companies should be able to answer several fundamental questions: Who is the seller? How are the buyer and seller related? How was the price determined? Does the group sell identical or similar goods to independent Turkish customers? Are royalties or licence fees paid separately? Does the Turkish company provide tooling or engineering assistance? Are there annual transfer-pricing adjustments? Are debit or credit notes issued after importation? Does the customs team know about these payments? Does the transfer-pricing documentation tell the same commercial story as the customs declarations?

If management cannot answer these questions, the company’s customs valuation framework should be reviewed.

Frequently Asked Questions About Related-Party Imports into Turkey

1. Can a Turkish subsidiary use the invoice price charged by its foreign parent as customs value?

Potentially, yes. The existence of a relationship does not by itself require rejection of transaction value. Customs authorities examine whether the relationship influenced the price.

2. How does Turkish customs define related parties?

The customs rules identify several relationships involving ownership, management, control, employment and family connections. Common control and certain ownership structures can establish the relevant relationship.

3. Does a transfer-pricing report prove that customs value is correct?

No. It can provide useful supporting evidence, but transfer pricing and customs valuation operate under different statutory frameworks.

4. Can Turkish customs reject an intercompany price simply because it seems low?

The relationship alone is not sufficient to reject transaction value. Customs must apply the valuation framework and examine whether the relationship influenced the price.

5. Do royalties paid to another group company affect customs value?

Potentially. Qualifying royalties and licence fees may need to be added where they relate to the imported goods and are payable as a condition of sale.

6. Can free tooling supplied to a foreign related manufacturer affect customs value?

Yes, potentially. Qualifying tools, dies, moulds, materials, engineering and other assists can require appropriate additions to customs value.

7. Can year-end transfer-pricing adjustments affect historical imports?

Potentially. The company should determine whether the adjustment represents additional or reduced consideration connected with previously imported goods.

8. What happens if Turkish customs determines that the declared related-party value was too low?

Additional customs duties may be assessed and Article 234 can potentially result in substantial administrative penalties. Ministry guidance describes a threefold-duty-difference penalty for qualifying deficient-value declarations, subject to applicable exceptions.

9. Can a related-party valuation dispute become a smuggling investigation?

Potentially, where authorities allege intentional conduct such as concealed payments or false invoicing. However, an ordinary valuation disagreement should not automatically be equated with criminal customs fraud.

10. What is the best way to reduce related-party customs risk?

Integrate customs valuation with transfer pricing, finance and legal compliance. Related-party pricing policies, royalties, assists and year-end adjustments should be reviewed for customs consequences before they create historical exposure.

Legal Support for Related-Party Imports and Customs Valuation in Turkey

For multinational companies, related-party imports into Turkey require more than checking whether the commercial invoice matches the transfer-pricing policy. The company must separately determine whether the declared price satisfies Turkish customs valuation requirements and whether royalties, licence fees, assists or other payments need to be incorporated into customs value.

The existence of a relationship between buyer and seller does not automatically invalidate transaction value. The Ministry of Trade expressly confirms that the relationship alone is insufficient to reject the price and that the circumstances surrounding the sale must be examined.

The greatest risks often arise where tax, finance and customs teams operate independently. A transfer-pricing adjustment made by the tax department, a royalty negotiated by the legal department or tooling supplied by the procurement department can potentially have customs consequences that the customs team never sees.

FFK Partner Hukuk ve Danışmanlık provides legal assistance to foreign investors, multinational companies, Turkish subsidiaries, international manufacturers and importers concerning related-party customs valuation, intercompany pricing, transfer-pricing adjustments, royalties and licence fees, assists, customs audits, Article 234 penalties and customs-related criminal investigations.

Av. Arb. Fırat Fesih Kaya assists companies with reviewing related-party import structures, challenging customs valuation assessments and developing coordinated customs compliance strategies for international corporate groups operating in Turkey.

Email: info@firatfesihkaya.av.tr
Address: Mevlana Bulvarı No:221, Yıldırım Tower, Balgat, Çankaya / Ankara

For multinational groups conducting regular intercompany imports into Turkey, a preventive customs valuation review can be significantly less costly than discovering during a post-clearance audit that the same valuation issue affects hundreds of historical customs declarations.