Turkey issued the first legislation in relation to the Mutual Agreement Procedure (MAP)

With Law No. 7338 on Turkish Tax Procedure Law (TPL) and Amending Certain Laws (“Law No. 7338”) published in the Official Gazette dated October 26, 2021, a domestic regulation was made for the first time regarding the mutual agreement procedure (MAP) in Turkey. The Turkish Revenue Administration (TRA) aims to eliminate uncertainties regarding the application of MAP with these regulations, thus making the procedure more effective and consequently increasing the success of the MAP process.

Why MAPS are higher on agenda?

The MAP article in tax conventions allows designated representatives (the “competent authorities”) from the governments of the contracting states to interact with the intent to resolve international tax disputes. These disputes involve cases of double taxation (juridical and economic) as well as inconsistencies in the interpretation and application of a convention. Since most instances of double taxation are dealt with automatically in tax conventions through tax credits, exemptions, or the determination of taxing rights of the contracting states, the majority of MAP cases are situations where the taxation of an individual or entity is unclear[1]. Transfer pricing cases are the best example of economic double taxation and are among the top international tax disputes subject to MAP.  One of the action plans of the OECD BEPS project is to make dispute resolution more effective (Action 14). To be fully compliant with an effective dispute resolution mechanism under the Action 14 Minimum Standard, Turkey signed the Multilateral Instrument (MLI).  

Turkey Inventory on MAP

Turkey has a treaty network with over 90 countries. In all these Double Tax Treaties (DTT), there is an article (article 25) for the Mutual Agreement Procedure. Although Turkey meets the requirements regarding availability and access to MAP, there was no domestic regulation until 2021 but only Guidance on MAP published by the TRA in 2019. Due to a lack of domestic regulation and uncertainties regarding the MAP processes, MAP was not considered an effective dispute resolution mechanism in Turkey. Therefore, the historic use of MAP in Turkey is also low compared to most European countries. The below table illustrates the latest inventory level of Turkey in relation to MAP[2].

Application Procedures

The Law clarifies that the taxpayers should apply to the TRA for a MAP in due time stated in the related double tax treaties. However, where there is no time limitation in the double tax treaty or a lack of any reference to a time limit in domestic legislation, MAP application should not be made later than three years following the formal date that the taxpayer is informed of the tax outcome with which they disagree.

There are two essential effects of MAP in terms of other domestic procedures.

Firstly, the MAP application ceases the period of limitations provided under the Turkish Procedural Law regarding the taxes and penalties subject to the application. However, when the taxpayer rejects the MAP conclusion, the period of limitations recommences.

Secondly, the MAP procedure also halts the period of filing a lawsuit which aims to solve the dispute resolution through the local legislation.

Finalization Procedures

Once the agreement between TRA and the competent authorities has been finalized, the taxpayer is notified in writing of the decision and is provided with an explanation of the result. Upon the acceptance by the taxpayer within thirty days, written confirmation of the agreement is exchanged between the administrations and provided to the taxpayer.

The decision between TRA and the competent authorities is not binding for the taxpayer. If the taxpayer wants to reject the decision (there is always such a right) then no notification can be done by the taxpayer. In the same way, if no notification is made, the taxpayer will be deemed to have rejected the agreement.

It is also important to note that the result will be binding for any court cases pending the outcome of MAP if the taxpayer accepts the MAP result.


TRA needs to increase the level of use of MAP in cross border tax dispute cases in accordance with the minimum standard of Action 14 of the BEPS Action Plans. With the help of this new domestic Law which brings clear guidance concerning the process, it is our expectation that the taxpayers can re-evaluate their use of the Turkish MAP as part of their tax risk management strategy for effective tax dispute resolution.

[1] OECD, MEMAP (Manual on effective Mutual Agreement Procedure), 1.2

[2] https://www.oecd.org/tax/dispute/2020-map-statistics-turkey.pdf