Transfer pricing and efficiency of taxation

According to increasing the process of globalization, companies working areas, way of competitions and way of management have been changing. Economical changes, the true shaping part of the globalization process, have turned the whole world to one market by using the facilities of emerging communication and information technologies. As a result of the new form of economical relations, multi national companies have gained more importance day by day. Moreover, they even become more powerful than governments.The multi national companies target to get the highest, maximum profit by trading goods and services in between countries. These companies set to achieve the highest profit by using transfer pricing system and capital transfer. They take actions for their plans to make a good profit according to the procedures and policies of these countries by taking advantage of the gap in their legal system.In our study, firstly, it is discussed that globalization and the motivations of multi national companies to make transfer pricing manipulations in the intra group transactions and the mechanisms of transfer pricing manipulations and it is also evaluated that the position of the multi national companies and their impacts in the global economy. Secondly, the study has analyzed the OECD transfer pricing guidelines and USA regulations whose objectives were to prevent unfair income shifting among the countries by using transfer pricing?. In the last part of our study, it is explained that how the tax incomes depreciate and how it affects the efficiency of taxation as a result of the improving of the transfer pricing and the process of transfer pricing in the Turkish Tax System. Some suggestions have been made regarding the transfer pricing.Key Words: Globalization, Multi National Companies, Transfer Pricing, Turkish Tax System, Efficiency of Taxation,