Transfer Pricing and Customs Valuation in Turkey | Multinational Company Risks 2026

Learn how transfer pricing affects customs valuation in Turkey, including related-party imports, year-end adjustments, royalties, intercompany pricing, customs penalties, post-clearance audits and criminal risks for multinational companies.

For multinational companies operating in Turkey, transfer pricing and customs valuation are closely connected but legally distinct areas. A Turkish subsidiary may import goods from its foreign parent company using a price designed to comply with the arm’s-length principle for corporate income tax purposes, yet Turkish customs authorities may still question whether that same price represents an acceptable customs value.

This creates an important compliance problem. From a corporate tax perspective, authorities are concerned with whether profits have been shifted through prices that differ from arm’s-length conditions. From a customs perspective, authorities are concerned with whether imported goods have been declared at the correct customs value and whether all legally required additions—such as certain royalties, assists, commissions or other payments—have been included.

Under Article 13 of Corporate Tax Law No. 5520, transactions between related parties must comply with the arm’s-length principle. The Turkish Revenue Administration describes this principle as requiring the price or consideration used between related parties to correspond to the price that would have arisen between independent parties.

Customs valuation, however, is governed primarily by Customs Law No. 4458 and the Customs Regulation. The Ministry of Trade confirms that the transaction-value method is the first valuation method to be considered, followed by the other statutory methods where transaction value cannot be used.

For multinational companies, the central lesson is therefore simple: a transfer price that is acceptable for corporate tax purposes is not automatically an acceptable customs value.

What Is Transfer Pricing in Turkey?

Transfer pricing concerns the prices used in transactions between related parties.

A multinational group may have a parent company in Germany, a manufacturing subsidiary in Poland, an intellectual-property company in another jurisdiction and a distribution subsidiary in Turkey.

When the Turkish company purchases products, services, intellectual-property rights or financing from another group company, the transaction may fall within Turkey’s transfer-pricing rules.

Article 13 of Corporate Tax Law No. 5520 provides that where companies conduct transactions with related persons using prices or consideration inconsistent with the arm’s-length principle, the resulting profit may be treated as distributed through transfer pricing.

Companies are also expected to maintain documentation supporting the prices applied in related-party transactions.

What Is Customs Valuation?

Customs valuation determines the value used to calculate ad valorem customs duties and to apply certain other customs measures.

The Ministry of Trade identifies six valuation methods: transaction value, transaction value of identical goods, transaction value of similar goods, unit-price method, computed-value method and the fallback method. These methods are generally considered sequentially, beginning with transaction value.

For most ordinary commercial imports, transaction value is therefore the starting point.

But related-party transactions create an additional question:

Did the relationship between the buyer and seller influence the price?

That question can become central where a Turkish subsidiary imports goods directly from its foreign parent or another group company.

Are Transfer Pricing and Customs Valuation the Same?

No.

This is perhaps the most important issue for multinational companies to understand.

Transfer pricing is primarily concerned with the allocation of income and expenses between related parties for tax purposes.

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

Both systems can examine the same intercompany transaction, but they do so under different legislation and for different purposes.

Consequently, a transfer-pricing report stating that a Turkish distributor’s operating margin falls within an arm’s-length range does not necessarily establish that the customs value of every imported product is correct.

Likewise, customs acceptance of an import price does not automatically establish compliance with Article 13 of Corporate Tax Law No. 5520.

Why Can the Two Systems Create Conflicting Risks?

The economic incentives can point in opposite directions.

From a corporate income tax perspective, an excessively high purchase price paid by a Turkish subsidiary to its foreign parent may reduce the Turkish company’s taxable profit.

Tax authorities may therefore question whether the Turkish company is paying too much.

From a customs perspective, however, an excessively low import price can reduce customs duties.

Customs authorities may therefore question whether the Turkish importer is paying too little.

This creates a difficult compliance position for multinational groups.

The company needs an intercompany pricing system that can withstand scrutiny from both tax authorities and customs authorities.

Are Related-Party Import Prices Automatically Rejected?

No.

The fact that a buyer and seller are related does not automatically mean that the transaction value is unacceptable for customs purposes.

However, related-party transactions can receive greater scrutiny because customs authorities may investigate whether the relationship influenced the price.

The company should therefore be capable of demonstrating the commercial basis of the intercompany price.

Useful evidence may include intercompany agreements, pricing policies, comparable uncontrolled transactions, transfer-pricing reports, product-level profitability data and evidence concerning sales to independent customers.

The stronger the documentation, the easier it becomes to explain why the declared price reflects the genuine commercial transaction.

Can a Transfer Pricing Report Prove the Customs Value?

Not necessarily.

A transfer-pricing report can be useful evidence, but it should not automatically be treated as decisive customs evidence.

Many transfer-pricing analyses focus on the profitability of the Turkish entity rather than the customs value of individual imported products.

For example, a transactional net margin method analysis may conclude that a Turkish distributor should earn a 3%–5% operating margin.

Customs authorities, however, may be examining whether the price declared for a specific imported machine was correct.

These are related economic questions, but they are not identical.

Companies should therefore avoid relying solely on their annual transfer-pricing report when responding to a customs valuation investigation.

What Are Year-End Transfer Pricing Adjustments?

Many multinational groups use year-end or periodic adjustments to ensure that subsidiaries achieve their target arm’s-length profitability.

Suppose a Turkish distributor imports goods throughout the year from its foreign parent.

At year-end, the group’s transfer-pricing analysis shows that the Turkish subsidiary earned a higher profit margin than the group’s target range.

The parent company may issue an additional debit adjustment to increase the Turkish company’s cost of goods.

Alternatively, where the Turkish subsidiary earned too little, the foreign parent may issue a credit adjustment.

These adjustments can create significant customs questions.

Can an Upward Transfer Pricing Adjustment Increase Customs Duties?

Potentially.

Suppose the Turkish company originally imports goods for EUR 10 million.

At year-end, an additional EUR 1 million is paid to the foreign supplier under the group’s transfer-pricing policy.

Customs authorities may investigate whether some or all of that EUR 1 million represents additional consideration connected with previously imported goods.

If it does, the customs value of the historical imports may require reconsideration.

The answer depends on the contractual structure, nature of the adjustment and relationship between the payment and the imported goods.

Companies should therefore never assume that a year-end transfer-pricing debit adjustment is solely a corporate tax issue.

What About a Downward Transfer Pricing Adjustment?

A downward adjustment creates the opposite question.

Suppose the Turkish importer originally paid EUR 10 million but later receives a EUR 1 million credit from its foreign supplier.

The company may ask whether it overpaid customs duties because the ultimate purchase price was effectively reduced.

The answer is not necessarily automatic.

Customs law has its own rules concerning transaction value, price adjustments and refunds.

The company should therefore examine whether the adjustment genuinely modifies the price of imported goods and whether the statutory requirements for requesting a customs refund are satisfied.

Why Should Year-End Adjustments Be Reviewed Before They Are Posted?

Because an accounting entry made for transfer-pricing purposes can create an unintended customs problem.

The tax team may see the adjustment simply as a mechanism for bringing the Turkish subsidiary within an arm’s-length profitability range.

The customs team may see the same payment as additional consideration for imported goods.

If the company discovers this issue only during a customs audit two years later, it may face additional customs duties, interest consequences, administrative penalties and potentially allegations that the original declarations were inaccurate.

Multinational companies should therefore establish a procedure requiring customs review before material transfer-pricing adjustments involving imported goods are finalized.

Can Royalties Create Both Transfer Pricing and Customs Risks?

Absolutely.

Royalties are one of the most important areas where transfer pricing and customs valuation overlap.

A Turkish subsidiary may import branded products from one group company while paying a trademark or technology royalty to another group company.

For transfer-pricing purposes, the question may concern whether the royalty rate is arm’s length.

For customs purposes, the question is different.

The Ministry of Trade states that royalties and licence fees related to the imported goods must be added to the price actually paid or payable where the buyer must pay them, directly or indirectly, as a condition of sale and they are not already included in the price.

Therefore, even a royalty that is perfectly defensible under transfer-pricing principles may still have to be included in customs value.

Are All Royalties Included in Customs Value?

No.

The legal conditions must be satisfied.

The royalty must be analyzed in relation to the imported goods and the conditions governing their sale.

For example, a payment concerning rights unrelated to the imported products may have a different customs treatment.

The Ministry also explains that payments for the right to distribute or resell imported goods should not be added where those payments are not a condition of the sale for export to Turkey.

Accordingly, multinational companies should review licence agreements from both a transfer-pricing and customs perspective.

What Are “Assists” and Why Do They Matter?

Customs value can include certain goods and services supplied by the buyer free of charge or at reduced cost for use in producing imported goods.

Examples identified by the Ministry include materials and components incorporated into the imported products, tools, dies and moulds used in production, materials consumed in production, and certain engineering, development, artwork, design work, plans and sketches performed outside Turkey and necessary for production.

This can create unexpected exposure for multinational groups.

A Turkish subsidiary may provide tooling to an overseas related manufacturer without charging for it. The invoice price of the imported goods may therefore appear complete while customs law requires an appropriate portion of the tooling value to be added.

Can Management Fees Affect Customs Value?

Potentially, depending on what the payment actually represents.

Multinational groups commonly charge Turkish subsidiaries for management, IT, procurement, engineering, marketing or administrative services.

The label placed on an intercompany invoice does not necessarily determine its customs treatment.

The company should analyze whether the payment genuinely concerns an independent service or whether it is economically connected with the production or sale of imported goods in a manner relevant under customs valuation rules.

This is particularly important for centralized procurement and product-development arrangements.

Can Customs Authorities Examine Intercompany Agreements?

Yes.

Intercompany agreements can be essential evidence in determining the nature of payments between related parties.

Customs authorities may need to understand why the Turkish importer pays royalties, management fees, year-end adjustments or other amounts to foreign group companies.

The contract should therefore correspond with commercial reality.

A multinational company whose agreements describe one pricing mechanism while its accounting records demonstrate another may face substantially greater difficulty explaining the transaction.

Can Transfer Pricing Documentation Be Used in a Customs Audit?

Potentially, yes.

Transfer-pricing documentation can help customs authorities understand the relationship between companies, pricing methodology, functional allocation and profitability structure.

However, it can also create risk if it contradicts the customs declarations.

For example, a transfer-pricing report might state that the foreign manufacturer controls pricing and adjusts the Turkish distributor’s purchase price annually.

Customs authorities could then investigate whether year-end adjustments should have affected previously declared customs values.

Companies should therefore review transfer-pricing reports for customs implications rather than assuming they will remain relevant only to corporate tax audits.

Can Customs Authorities Impose Penalties for Incorrect Valuation?

Yes.

The Ministry of Trade states that under Article 234/1(b) of Customs Law No. 4458, where examinations reveal that the declared value of goods subject to ad valorem duties is deficient compared with the value determined under the statutory valuation rules, the customs-duty difference can be collected together with a fine equal to three times the duty difference, subject to the specific statutory rules and exceptions.

The Ministry also notes different treatment for certain differences below 5% and deficiencies caused by formal calculation errors.

For multinational companies with large annual import volumes, even a relatively small valuation adjustment can therefore produce substantial exposure when applied across thousands of declarations.

Can Transfer Pricing Issues Create Criminal Customs Risk?

Potentially, but a transfer-pricing adjustment does not automatically constitute a criminal offence.

Criminal exposure becomes more serious where authorities allege deliberate concealment, false invoices, artificial documentation or intentional understatement of the customs value.

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

The distinction between an incorrect technical valuation position and intentional customs evasion is therefore crucial.

A company should not allow an ordinary disagreement concerning an intercompany pricing methodology to be automatically characterized as smuggling.

Can a Transfer Pricing Policy Be Used as Evidence of Good Faith?

Potentially.

A documented group pricing policy may help explain why the company used a particular import price.

If the pricing methodology was established before the transactions, consistently applied across jurisdictions and supported by professional economic analysis, this may help demonstrate that the price was not arbitrarily invented to reduce Turkish customs duties.

However, a transfer-pricing policy is not a complete defense if customs legislation independently requires additional amounts to be included.

The company still needs a separate customs valuation analysis.

What Is the Risk of Historical Customs Assessments?

This is particularly important for multinational companies.

A transfer-pricing methodology is rarely used for only one shipment.

If customs authorities conclude that the company’s methodology systematically understated customs value, the same issue may affect hundreds or thousands of historical declarations.

For example, an omitted royalty may have been paid for five years.

A year-end transfer-pricing adjustment may have been made annually.

A tooling arrangement may apply to an entire product line.

A single audit finding can therefore expand into a substantial historical customs exposure.

Should Multinational Companies Review Previous Imports?

Yes, where a material inconsistency is discovered.

The company should identify when the pricing methodology began, which products were affected, which related suppliers were involved and whether the same issue exists across previous customs declarations.

The review should also determine whether the problem affects only customs value or potentially GTIP, origin, VAT or other import-related obligations.

This historical assessment allows management to understand the company’s potential exposure before responding to authorities.

Can Customs and Tax Authorities Reach Different Conclusions?

Potentially, because they apply different statutory frameworks.

The Turkish Revenue Administration applies Article 13 of Corporate Tax Law No. 5520 to related-party transactions and the arm’s-length principle.

Customs authorities apply the valuation rules under Customs Law No. 4458 and the Customs Regulation.

Consequently, companies should not assume that a corporate-tax audit outcome automatically determines customs treatment or vice versa.

This is precisely why integrated tax and customs compliance is essential.

How Should Multinational Companies Manage Transfer Pricing and Customs Valuation Together?

The strongest approach is to establish an internal process connecting the tax, finance, customs, legal and supply-chain teams.

Before a new intercompany pricing policy is implemented, customs specialists should examine its potential effect on imported goods.

Material year-end adjustments should receive customs review before being booked.

Royalty agreements should be reviewed for both transfer-pricing and customs consequences.

Intercompany contracts should clearly identify what payments represent.

Customs brokers should also receive sufficient information to prepare accurate declarations rather than merely receiving a commercial invoice without understanding related payments.

What Documents Should Companies Preserve?

Multinational companies should maintain intercompany sales agreements, transfer-pricing policies, transfer-pricing reports, invoices, purchase orders, bank records, customs declarations, royalty agreements, licence agreements, service agreements and documentation concerning year-end adjustments.

Where assists are involved, tooling and engineering costs should also be documented.

The documentation should allow the company to explain not only what price was declared, but why that price was selected and whether any additional payments were connected with the imported goods.

What Should Companies Do Before a Customs Audit?

Companies with significant related-party imports should conduct a customs valuation health check.

The review should compare customs declarations with intercompany accounting records.

Particular attention should be given to royalties, licence fees, transfer-pricing adjustments, free-of-charge tooling, engineering services, management charges and payments made to entities other than the seller.

The company should also compare its customs documentation with its transfer-pricing documentation.

Contradictions should be identified before customs authorities discover them.

What Should a Company Do After Receiving a Customs Valuation Assessment?

The company should first determine precisely how customs calculated the alternative value.

If transaction value was rejected, the legal basis for rejection should be identified.

The Ministry’s guidance confirms that valuation methods operate in a prescribed sequence beginning with transaction value.

The company should then determine whether the adjustment relates to the underlying intercompany price, royalties, assists, year-end payments or another element.

Any administrative objection should address the customs valuation methodology directly rather than relying solely on a transfer-pricing report.

If significant penalties or criminal allegations are involved, the customs, tax and criminal-defense strategies should be coordinated.

Frequently Asked Questions About Transfer Pricing and Customs Valuation in Turkey

1. Is a transfer price accepted for Turkish tax purposes automatically accepted by customs?

No. Transfer pricing and customs valuation operate under different legislation and serve different purposes.

2. Can related companies use transaction value for customs purposes?

Potentially, yes. Related-party status does not by itself mean that every declared transaction value must be rejected, but the effect of the relationship on the price may require examination.

3. Can year-end transfer pricing adjustments create additional customs duties?

Potentially. An upward adjustment connected with previously imported goods may require analysis to determine whether historical customs values are affected.

4. Can a downward transfer pricing adjustment result in a customs refund?

Potentially, but not automatically. The adjustment must be analyzed under the applicable customs valuation and refund rules.

5. Are royalties included in Turkish customs value?

Certain royalties and licence fees must be added where the statutory conditions are satisfied, including where they relate to the imported goods and are payable as a condition of sale.

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

Yes, potentially. Customs valuation rules can require certain buyer-supplied materials, tools, moulds, engineering and other assists to be apportioned into customs value.

7. Can customs authorities review a company’s transfer-pricing documentation?

Transfer-pricing documentation can become relevant evidence when authorities examine related-party pricing and the commercial structure of imported transactions.

8. What penalties can arise from an understated customs value?

Article 234 of Customs Law No. 4458 can result in collection of the customs-duty difference and, in qualifying cases, an administrative fine calculated at three times that difference, subject to applicable exceptions.

9. Can an incorrect intercompany price result in a criminal investigation?

Potentially, where authorities allege intentional customs evasion, false documentation or other conduct falling within criminal legislation. A technical transfer-pricing or valuation disagreement should not automatically be treated as criminal fraud.

10. What is the biggest compliance risk for multinational companies?

One of the greatest risks is managing transfer pricing and customs valuation separately. A year-end adjustment, royalty or intercompany charge created for tax purposes can have unintended customs consequences if nobody evaluates the import side of the transaction.

Legal Support for Transfer Pricing and Customs Valuation Disputes in Turkey

For multinational companies, transfer pricing and customs valuation should be reviewed as interconnected compliance issues without treating them as identical legal concepts. Article 13 of Corporate Tax Law No. 5520 requires related-party transactions to comply with the arm’s-length principle, while Turkish customs legislation independently determines the customs value of imported goods.

Problems frequently arise from related-party imports, year-end transfer-pricing adjustments, royalties, licence fees, intercompany service charges, assists and inconsistencies between transfer-pricing documentation and customs declarations. Where these issues are repeated across large numbers of imports, even a relatively narrow valuation disagreement can develop into significant historical customs exposure.

FFK Partner Hukuk ve Danışmanlık provides legal assistance to foreign investors, multinational companies, Turkish subsidiaries, importers and international corporate groups concerning transfer pricing and customs valuation disputes, related-party imports, year-end price adjustments, royalty and licence-fee assessments, customs undervaluation allegations, Article 234 penalties, post-clearance audits and customs-related criminal investigations in Turkey.

Av. Arb. Fırat Fesih Kaya assists companies in coordinating customs, corporate tax and legal-risk analysis, challenging disputed customs valuation assessments and developing compliance structures designed to reduce future exposure.

Email: ffk@ffkpartnerhukuk.com.tr
Address: Mevlana Bulvarı No:221, Yıldırım Tower, Balgat, Çankaya / Ankara

For multinational companies conducting substantial related-party imports into Turkey, reviewing transfer-pricing policies from a customs valuation perspective before an audit begins can prevent a tax-driven pricing adjustment from becoming a major customs assessment or criminal investigation.