Advance pricing agreements in transfer pricing

It is inevitable that new regulations will be introduced in case the tax rules / regulations of the countries do not comply with the regulations of other countries, since countries' economic and social relations with each other continue in a globalizing world. However, the instinct of each country to protect its own citizens requires new arrangements and treaties in tax systems. Advance pricing arrangements included in the Turkish tax system is one of these issues. Businesses with international position aim to maximize profits through transfers of goods and services between countries. In line with these objectives, international enterprises tend to carry out activities that provide maximum benefit to them within the scope of price laws and laws of the countries where they invest. For this reason, the advance pricing agreements, one of the transfer pricing methods, is made in order to prevent the enterprises from being subject to double taxation. In other words, advance pricing agreements are made with the aim of eliminating the double taxation problem caused by the tax system mismatch between countries and providing standardization between the practices in order to achieve beneficial results for tax administrations. In this study, advance price agreements based on mutual agreement procedure are examined theoretically for both administration and taxpayer. Keywords: Transfer Pricing, Advance Pricing Agreements, Turkish Tax System, Double Taxation, Tax Treaty