Analysis of transfer pricing and thin capitalization on group companies

Cross border trade of multinational enterprises was improved through the globalization. Multinational enterprises undertake the majority of their cross border transactions within affiliated entities. The inter group transactions fix their internal price according to market value. This is known as transfer pricing. One of the consequences of the transfer pricing manipulations is tax avoidance. Using transfer pricing methods affects corporation tax base multinational enterprises. Therefore transfer pricing becomes one of the most important issues of international taxation today.This thesis examines the effect of 5520 numbered Corporation Tax Law on the internal transaction of multinational enterprises by the transfer pricing and the thin capitalization law in details.Key Words: Group Companies, transfer pricing, thin capitalization, 5520 numbered Corporation Tax Law.