Turkish Customs suspects that related-party transfer pricing reduced the customs value of imported goods. Learn how multinational companies can defend transaction values, prove arm’s-length pricing and manage customs and transfer-pricing risks.

Related-party imports are a significant customs valuation risk for multinational groups operating in Turkey.

A Turkish subsidiary may purchase goods from its foreign parent, sister company or another group entity under a global transfer-pricing policy. Turkish Customs may then question whether the relationship between buyer and seller caused the declared import price to be artificially reduced.

The consequences can include:

• Rejection of the declared transaction value;
• Higher customs value;
• Additional customs duties;
• Additional import taxes;
• Administrative penalties;
• Review of historical declarations;
• Post-clearance audit exposure.

The existence of a related-party relationship, however, does not by itself justify rejecting the declared transaction value. Current Ministry of Trade guidance states that where buyer and seller are related, the circumstances surrounding the sale should be examined; if the relationship did not influence the price, transaction value may still be accepted. If Customs believes the relationship influenced the price, the declarant must be informed in writing and has an opportunity to respond.

For multinational companies, the key is to demonstrate not merely that the transfer price complies with corporate tax principles, but that the declared value also satisfies customs valuation rules.

1. Customs Valuation and Transfer Pricing Are Not the Same Analysis

This is the starting point.

Corporate transfer pricing generally focuses on whether transactions between related parties comply with the arm’s-length principle for tax purposes.

Customs valuation asks a different question:

What is the proper customs value of the imported goods under the customs valuation framework?

A transfer-pricing report can be important evidence, but it does not automatically determine customs value.

2. Related Parties Can Still Use Transaction Value

Multinationals sometimes assume:

Related seller = invoice price automatically rejected.

That is incorrect.

The Ministry’s current guidance expressly states that the existence of a relationship between buyer and seller is not, by itself, sufficient reason to reject transaction value.

The critical question is whether the relationship influenced the price.

3. Identify the Exact Relationship

Customs rules recognize several forms of relationship, including situations involving:

• Common ownership;
• Direct or indirect control;
• Common third-party control;
• Legal partnership;
• Management relationships;
• Certain family relationships.

The Ministry’s guidance also identifies a direct or indirect holding of at least 5% of voting shares or capital among the relevant relationship criteria.

Document the group’s ownership and control structure clearly.

4. Prepare a Group Structure Chart

The Customs file should identify:

Foreign manufacturer

→ regional holding company

→ Turkish importer

and any intermediate entities.

Include:

• Ownership percentages;
• Management relationships;
• Functions of each company;
• Contractual relationships.

Transparency is preferable to allowing Customs to reconstruct the group independently.

5. Determine How the Transfer Price Was Actually Calculated

The company should be able to explain the price commercially.

Possible methods include:

• Cost plus;
• Resale-price methodology;
• Comparable uncontrolled price;
• Transactional net-margin methodology;
• Global price list with distributor discount.

Customs should not receive only a final invoice number without an explanation of how that number arose.

6. Submit the Transfer-Pricing Documentation

Relevant materials may include:

• Transfer-pricing report;
• Local file;
• Master file;
• Intercompany pricing policy;
• Benchmarking study;
• Comparable transactions;
• Functional analysis.

The objective is to demonstrate that the related-party price was generated through a structured commercial methodology rather than selected merely to reduce customs duties.

7. Do Not Submit the Transfer-Pricing Report Without a Customs Review

A tax document may contain statements that create customs questions.

For example:

“The Turkish distributor’s margin is adjusted annually to achieve a target profitability range.”

Customs may ask:

Does this mean the original import price was provisional?

Therefore, tax and customs teams should review the documentation together before submission.

8. Explain the Functions of the Turkish Importer

A Turkish subsidiary performing extensive functions may require a different commercial margin from a limited-risk distributor.

Document whether the Turkish entity performs:

• Marketing;
• Warehousing;
• Distribution;
• Warranty support;
• Customer service;
• Inventory management;
• Market development.

This helps explain the economic structure behind the transfer price.

9. Explain the Foreign Seller’s Functions

Likewise identify whether the foreign group entity:

• Manufactures the goods;
• Owns intellectual property;
• Performs research and development;
• Bears inventory risk;
• Provides marketing support.

The full value chain can help explain why profits are allocated in a particular manner.

10. Comparable Unrelated Sales Can Be Powerful Evidence

One of the strongest forms of evidence may be sales by the foreign supplier to independent buyers.

Compare:

Foreign parent → Turkish subsidiary

with

Foreign parent → independent distributor.

Relevant differences must then be considered.

11. Compare Like With Like

An unrelated sale is not automatically a reliable comparable.

Review:

• Product;
• Model;
• Quantity;
• Market;
• Commercial level;
• Delivery terms;
• Warranty;
• Timing.

Substantial differences may require adjustments.

12. Customs Rules Expressly Recognize Test Values

Current Ministry guidance states that in related-party transactions, the importer can support transaction value by showing that it closely approximates qualifying values involving identical or similar goods, including sales between unrelated buyers and sellers or values determined under specified alternative methods.

These values are used for comparison; they are not simply substituted automatically for the declared transaction price.

13. Quantity Differences Matter

A multinational subsidiary purchasing 100,000 units annually may receive substantially better pricing than an independent distributor purchasing 2,000.

The Ministry’s valuation guidance recognizes adjustments for proven differences in quantity and commercial level.

Document volume commitments and discount structures.

14. Commercial Level Matters

Compare whether the transaction involves:

manufacturer → national distributor

or

manufacturer → retailer.

These transactions may legitimately carry different prices.

Customs comparisons should account for commercial-level differences where properly demonstrated.

15. Reconcile Invoice Price With Bank Payments

Prepare a clear trail:

Intercompany invoice

→ Customs declaration

→ bank payment

→ intercompany ledger

→ general ledger.

Any difference should be explained.

16. Review Intercompany Current Accounts

Multinational groups often use intercompany current accounts rather than one bank payment for each invoice.

Customs may see:

Invoice value: EUR 500,000

but

No matching EUR 500,000 transfer.

Prepare a reconciliation showing how the invoice was settled within the intercompany account.

17. Review Year-End Transfer-Pricing Adjustments

This is one of the highest-risk areas.

A group may import goods throughout the year and later make a transfer-pricing adjustment because the Turkish subsidiary’s profitability is above or below the target range.

The company should determine whether that adjustment is connected to the price actually paid or payable for imported goods.

18. Downward Adjustments Need Customs Analysis Too

Suppose the Turkish subsidiary receives a year-end credit note from the foreign parent.

The company should not assume that this is solely a corporate tax matter.

Determine whether the credit:

• Relates to imported goods;
• Changes their purchase price;
• Relates to services;
• Reflects another commercial adjustment.

Document the reasoning.

19. Upward Adjustments Can Create Additional Customs Exposure

An upward transfer-pricing adjustment can be particularly important.

If the Turkish importer later pays an additional amount connected to imported goods, Customs may examine whether that amount forms part of the price actually paid or payable.

The Ministry describes that concept broadly as payments made or to be made by the buyer to the seller, or for the seller’s benefit, in connection with the imported goods.

20. Do Not Label Every Adjustment a “Management Fee”

The legal substance matters more than the accounting label.

Customs may examine whether a payment called:

• Management fee;
• Service fee;
• Price adjustment;
• Royalty;
• True-up;

actually relates to imported goods.

The underlying agreement and calculation should support the label.

21. Review Royalties and Licence Fees

Multinational groups frequently make separate payments for:

• Trademarks;
• Patents;
• Technology;
• Know-how;
• Manufacturing licences.

Certain royalties and licence fees related to imported goods and payable as a condition of sale may need to be added to the transaction value. The Ministry’s valuation guidance expressly identifies qualifying royalties and licence fees among potential additions.

22. Review Assists Provided by the Turkish Company

The Turkish importer may provide the foreign manufacturer:

• Moulds;
• Tooling;
• Components;
• Engineering;
• Designs;
• Development work.

Certain qualifying goods and services provided free or at reduced cost may require an addition to customs value where the statutory conditions are satisfied.

23. Examine Resale Proceeds Returning to the Foreign Seller

Determine whether part of the Turkish subsidiary’s resale proceeds is transferred directly or indirectly back to the foreign seller.

The valuation framework specifically addresses qualifying proceeds from subsequent resale, disposal or use that accrue to the seller.

24. Review Intercompany Service Agreements

The group may have separate agreements for:

• IT;
• Marketing;
• Technical assistance;
• Management;
• Engineering;
• Procurement.

Determine whether those services are genuinely separate from the imported goods.

Do not automatically add or exclude them without analyzing their substance.

25. Separate Post-Import Activities

Activities performed after importation can raise different valuation questions from costs directly associated with the imported goods.

Contracts and invoices should clearly distinguish goods from genuinely separate services wherever possible.

26. Customs May Review Historical Imports

A transfer-pricing concern concerning one declaration can expand into a multi-year review.

Create a historical database containing:

Declaration

Invoice

Supplier

Declared customs value

Payment

Year-end adjustment

Royalty

Relevant intercompany agreement.

This allows the company to quantify potential exposure before the audit expands.

27. Compare Transfer-Pricing Adjustments With Customs Declarations

This is particularly important where hundreds or thousands of declarations are involved.

Determine whether a year-end adjustment can be allocated:

• By product;
• By invoice;
• By import period;
• By business unit.

If the company cannot explain the relationship, Customs may form its own interpretation.

28. Coordinate the Tax and Customs Teams

The tax department should not tell the tax authority:

“The imported goods were deliberately priced low to leave the Turkish distributor a target margin,”

while the customs department argues:

“The relationship had no effect on the import price.”

These positions can create obvious difficulties.

The company’s explanations should be legally accurate and internally consistent.

29. Customs Compliance Should Be Included in Transfer-Pricing Policy Design

Transfer-pricing policies are frequently designed primarily for corporate income tax.

For import-heavy groups, customs consequences should also be considered when establishing:

• Pricing formulas;
• Year-end adjustments;
• Royalties;
• Intercompany services;
• Distributor margins.

A tax-efficient structure can create unexpected customs exposure if customs valuation is ignored.

30. Ask Customs to Identify Its Concern Precisely

If Customs alleges that the relationship influenced the price, determine the basis.

Is Customs relying on:

• Low gross margin?
• Unrelated comparable imports?
• Transfer-pricing report?
• Year-end adjustment?
• Royalty payments?
• Supplier cost information?

The Ministry’s guidance states that where Customs considers the relationship to have influenced the price, its reasons are communicated to the declarant in writing; the guidance specifies a 15-day response opportunity from notification.

31. Use the Response Period Effectively

A response should not merely state:

“Our transfer prices are arm’s length.”

Provide a structured customs valuation defense including:

• Group relationship;
• Pricing methodology;
• Circumstances of sale;
• Comparable transactions;
• Commercial-level differences;
• Quantity differences;
• Payment reconciliation;
• Relevant adjustments.

32. Challenge Inappropriate Comparables

If Customs relies on unrelated imports, determine whether those goods are truly comparable.

Review:

• Manufacturer;
• Model;
• Specification;
• Quantity;
• Commercial level;
• Date;
• Freight.

The Ministry’s guidance requires proven differences in commercial level, quantity and specified cost elements to be considered in the comparison.

33. Customs Cannot Automatically Replace the Price With a Test Value

The Ministry’s related-party guidance expressly states that qualifying test values are used for comparison and are not simply used to establish a replacement value for the transaction.

This distinction can be important where Customs treats a benchmark as an automatic substitute for the invoice price.

34. The Valuation Methods Must Be Applied Sequentially

If transaction value cannot lawfully be used, Customs valuation proceeds through the prescribed methods.

The Ministry identifies six methods and confirms that a later method generally should not be used while value can be determined under an earlier one.

The company should therefore identify exactly which method Customs applied.

35. Arbitrary Valuation Is Not Permitted

Even if the dispute reaches the fall-back method, the Ministry’s guidance states that customs value cannot be based on arbitrary or fictitious values, minimum customs values or a system automatically requiring the higher of two alternative values.

A suspicion of transfer-pricing manipulation does not create unlimited valuation discretion.

36. Separate Additional Duty From the Penalty

Customs may issue:

additional assessment

plus

administrative penalty.

These should be examined separately.

Even if Customs establishes a higher value, the statutory basis and calculation of the penalty should still be reviewed independently.

37. Protect Formal Challenge Deadlines

Do not allow internal group discussions or negotiations with Customs to consume the procedural deadline applicable to an assessment or penalty.

Record:

• Decision date;
• Notification date;
• Response deadline;
• Formal objection deadline.

The substantive evidence can then be developed in parallel.

38. Preserve Contemporaneous Evidence

The strongest documents are often those created before the audit:

• Pricing policies;
• Emails;
• Contracts;
• Price lists;
• Benchmarking studies;
• Board materials;
• Supplier invoices.

A retrospective letter saying that “the relationship did not influence the price” carries less weight if historical records suggest otherwise.

39. Review Customs Broker Files

Multinationals should also determine what information was provided to the customs broker.

Was the broker informed about:

• Related-party status;
• Royalties;
• Year-end adjustments;
• Assists?

An internal compliance failure can arise where tax and finance teams know information that never reaches the customs function.

40. Review Voluntary Correction Strategy Carefully

If the internal review identifies genuine under-declaration, determine the appropriate corrective strategy before Customs expands the investigation.

Do not automatically amend years of declarations before:

• Quantifying exposure;
• Verifying the legal treatment;
• Reviewing limitation issues;
• Evaluating penalties.

41. Create a Customs-to-Transfer-Pricing Reconciliation

A multinational importer should maintain an annual reconciliation showing:

Imported goods value

• relevant additions

± relevant pricing adjustments

= customs valuation position.

This makes later audits substantially easier to manage.

42. Establish an Adjustment Notification Protocol

Finance should notify the customs team before implementing:

• Transfer-pricing true-ups;
• Credit notes;
• Debit notes;
• Royalty adjustments;
• Intercompany reallocations.

Customs implications should be reviewed before the accounting entry is finalized.

43. Prepare for Post-Clearance Audit

The Ministry’s current 2026 customs materials continue to maintain guidance and compliance resources relevant to customs operations and tariff administration.

Multinationals with substantial related-party imports should therefore maintain audit-ready valuation documentation rather than waiting for a formal investigation.

44. Create One Consistent Group Narrative

Customs, corporate tax, accounting and transfer-pricing positions should be coordinated.

That does not mean forcing different legal systems into one analysis.

It means ensuring that factual statements concerning:

• Pricing;
• Functions;
• Risks;
• Payments;
• Adjustments;

remain consistent across the group’s documentation.

45. Immediate Action Plan for Multinationals

When Turkish Customs questions related-party import pricing:

Identify Customs’ exact concern

→ protect the response and challenge deadlines

→ map the group relationship

→ document the pricing methodology

→ reconcile invoices and payments

→ review transfer-pricing reports

→ identify unrelated comparables

→ adjust for quantity and commercial level

→ review year-end true-ups

→ review royalties and assists

→ analyze intercompany service payments

→ quantify historical exposure

→ prepare the customs valuation defense

→ challenge additional assessments and penalties where justified

→ create a future customs-transfer-pricing reconciliation system.

25-Point Related-Party Import Checklist

1. Group ownership chart.
2. Intercompany sales agreement.
3. Transfer-pricing policy.
4. Local transfer-pricing report.
5. Master file where relevant.
6. Functional analysis.
7. Benchmarking study.
8. Comparable uncontrolled sales.
9. Product comparison.
10. Quantity comparison.
11. Commercial-level comparison.
12. Invoice records.
13. Bank payments.
14. Intercompany ledger.
15. Accounting records.
16. Credit notes.
17. Debit notes.
18. Year-end true-ups.
19. Royalty agreements.
20. Licence agreements.
21. Intercompany service agreements.
22. Assist documentation.
23. Customs declaration history.
24. Customs’ written valuation concerns.
25. Assessment and penalty calculations.

Frequently Asked Questions

1. Can Turkish Customs reject a price merely because buyer and seller are related?

No. Current Ministry guidance states that the relationship alone is insufficient to reject transaction value. The relevant issue is whether the relationship influenced the price.

2. Is a transfer-pricing report enough to prove customs value?

Not necessarily. It can be important evidence, but customs valuation and corporate transfer pricing apply different legal frameworks. Customs-specific evidence should also be prepared.

3. Can Customs compare the related-party price with sales to independent buyers?

Yes, qualifying test values can be relevant. Appropriate differences in quantity, commercial level and specified costs should be considered.

4. Can Customs automatically substitute the independent comparable price?

The Ministry states that the relevant test values in this related-party context are used for comparison and are not themselves simply used to establish a substitute value.

5. Are year-end transfer-pricing adjustments relevant to Customs?

Potentially. The company should determine whether an adjustment changes or relates to the price actually paid or payable for imported goods.

6. Can royalties increase customs value?

Yes, certain royalties and licence fees can require inclusion where the applicable conditions are satisfied.

7. What if Customs believes the relationship influenced the price?

The Ministry’s current guidance provides for written communication of Customs’ concerns and states that the declarant has 15 days from notification to respond.

8. Can Customs use an arbitrary higher value after rejecting the transfer price?

No. Customs must proceed under the prescribed valuation framework, and the fall-back method cannot be based on arbitrary or fictitious values.

9. Can one transfer-pricing investigation affect previous imports?

Yes. Customs may examine historical declarations involving the same related-party pricing structure. Multinationals should therefore quantify declaration-level exposure promptly.

10. What is the most important step for a multinational facing this investigation?

Build a customs-specific explanation of the intercompany price. The company should connect its transfer-pricing methodology with actual invoices, payments, comparable transactions, quantity and commercial-level differences, year-end adjustments, royalties and other intercompany payments instead of relying solely on a corporate tax transfer-pricing report.

Client-Focused Legal Support for Related-Party Customs Valuation Disputes in Turkey

Related-party customs investigations can involve:

Transfer pricing

Customs valuation

Related-party imports

Transaction value

Intercompany pricing

Year-end true-ups

Royalties and licence fees

Post-clearance audits

Additional customs assessments

and customs penalties.

Fırat Fesih Kaya Law Office assists multinational groups, foreign manufacturers and Turkish subsidiaries where Turkish Customs questions whether related-party pricing has reduced the declared customs value of imported goods.

Lawyer Fırat Fesih Kaya provides legal assistance in preparing customs valuation defenses, reviewing intercompany pricing and transfer-pricing documentation, analyzing comparable transactions and year-end adjustments, coordinating customs and tax positions, challenging additional assessments and penalties, and managing historical import exposure.

Phone: +90 312 434 22 22
Mobile: +90 532 769 22 22
Email: info@firatfesihkaya.av.tr
Address: Mevlana Boulevard No:221, Yıldırım Tower, Office No:148, 06520 Balgat, Çankaya, Ankara, Turkey