Tax Disputes Comparative Guide

1 Legal framework

1.1 Which laws govern taxation and tax disputes in your jurisdiction?

In Türkiye, the general principles and procedures relating to taxation, the resolution of tax disputes and relevant dispute resolution methods are primarily set out in the Tax Procedural Code 213. Given that tax litigation falls under administrative jurisdiction law, the procedures to be followed in tax cases are set out in the Administrative Jurisdiction Procedures Code 2577.

1.2 Do any other regional, national or supranational rules or regulations have relevance in this regard?

As per Article 90 of the Turkish Constitution, the international agreements that Türkiye has signed and that have duly entered into effect have the force of law and cannot be claimed as unconstitutional.

Where conflicts emerge between international agreements concerning fundamental rights and freedoms and domestic laws that contain different provisions on the same subject, the international agreements will prevail. The scope of fundamental rights and freedoms regulated under the Turkish Constitution includes:

• tax duties, which are regulated in the section entitled "Political Rights and Duties"; and
• property rights, which are regulated in the section entitled "Rights and Duties of the Person".

Double tax treaties (DTTs) are international agreements regarding fundamental rights and freedoms, which means that in case of any conflict, the provisions of the relevant double tax treaty will prevail.

1.3 Which authorities are responsible for enforcing the tax laws? What is their general approach to enforcement?

In Türkiye, there are two main tax authorities:

• the Revenue Administration, which is responsible for levying and collecting taxes through tax offices; and
• the Tax Inspection Board, whose tax inspectors conduct inspections of taxpayers.

These authorities operate under the Ministry of Treasury and Finance within the Turkish administrative system.

1.4 To what extent do the tax authorities cooperate with (a) other national authorities and (b) their international counterparts in enforcing the tax laws? Does this vary depending on the applicable tax?

The tax authorities have the authority to request information to substantiate and assess events that relate to taxation. The Turkish tax authorities collaborate with both national authorities and their international counterparts to collect information on tax-related matters, with the aim of ensuring the precise application of the tax laws. Public administrations/institutions, taxpayers and real and legal persons that interact with taxpayers must provide information to the tax authorities on request.

In addition, under the exchange of information provisions outlined in applicable DTTs, the Convention on Mutual Administrative Assistance in Tax Matters and the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information, to which Türkiye is a signatory, the tax authorities may request information from their counterparties in other relevant states, which will exchange information on the taxes covered by the relevant agreements.

2 Tax investigations

2.1 How do the tax authorities monitor compliance with the tax laws? Does this vary depending on the individual taxpayer or the applicable tax?

The main tools through which the tax authorities can monitor whether taxpayers are compliant with the tax laws include:

• on-site inspections;
• tax audits; and
• requests for information.

The application of these tools by the tax authorities will vary depending on the taxpayer.

2.2 What typically triggers a tax investigation in your jurisdiction?

In Türkiye, the tax authorities do not adhere to a regular audit cycle for taxpayers. Tax audits are commonly performed based on selection facilitated by risk assessment software. Tax audits can be carried out on either a sector-specific or issue-specific basis.

In addition to regular risk-based selection through assessment software, various situations might trigger a tax investigation in Türkiye. One of the most common triggers is denouncement. Reports from whistleblowers – whether internal employees or external sources – can prompt the tax authorities to initiate an investigation.

2.3 What is the limitation period for commencing a tax investigation in your jurisdiction?

The general statute of limitations is five years. According to this rule, the statute of limitations will lapse for taxes that are not assessed and notified to the taxpayer within five years, as of the beginning of the calendar year following that in which the taxable event occurred. Some exceptional cases to this general rule are also envisaged under Turkish law. One such exception is that an application by the tax authorities to the Valuation Commission for a determination of the tax base will interrupt the limitation period. However, this cannot last for more than one year, in any case.

Another exceptional situation concerns stamp tax. As long as the document which is subject to stamp tax is being used, the underpaid stamp tax can be assessed, regardless of the five-year statute of limitations.

2.4 How does a tax investigation typically unfold in your jurisdiction?

A tax audit begins with notification of the taxpayer by the tax inspector in the form of a written letter stating the scope of the tax audit and the periods covered. Thereafter, the tax inspector will send a letter requesting the submission of all books, documentation and other information regarding the periods which are subject to the tax audit.

2.5 What is the typical timeframe for the investigation?

A tax audit must be finalised within:

• one year of commencement in case of a full audit; and
• six months of commencement in the case of a limited audit.

If the tax audit cannot be completed in time, the tax inspector may request an additional period, explaining why the audit has not been finalised within the relevant period. This request will be evaluated by the unit to which the tax inspector is affiliated and an additional period of up to six months may be granted.

2.6 What powers do the tax authorities have in conducting their investigation, in relation to (a) the taxpayer itself, (b) its employees and (c) third parties?

Please see question 1.4 with regard to the tax authorities' powers to request information and documents during the tax audit.

2.7 On what grounds, if any, can taxpayers refuse to disclose commercial information during the investigation?

Natural and legal persons that receive a request for information cannot avoid disclosing the requested information, with the exception of the following:

• the Post, Telegraph and Telephone Administration, in the case of information learned from communications that it intermediates;
• attorneys, in the case of facts they learn in the course of exercising their professional duties; and
• healthcare personnel, in the case of information regarding patients' illnesses.

Taxpayers can exercise their right to remain silent to avoid disclosing commercial information; however, this is a controversial issue both in doctrine and in case law.

2.8 Can the taxpayer object to or challenge the tax investigation? Are any other avenues available for resolving the matter?

Taxpayers have the right to request a hearing before the Report Evaluation Committee (REC) while signing the tax audit closing minutes – for example, if:

• the taxpayer believes that it was unable to fully explain its position to the tax inspector during the audit process;
• the parties could not reach agreement on certain issues; or
• the taxpayer's explanations were not considered.

If the taxpayer's request for a hearing is accepted, the tax audit report prepared by the tax inspector will be sent to the REC, which comprises at least three tax inspectors, for evaluation in terms of its compliance with tax laws, communiques, related decrees, regulations, circulars and tax rulings. If the tax audit report is found not to comply with the relevant legislation, it is sent back to the tax inspector with a justified decision for re-evaluation. However, if the REC finds that the report is in line with the tax legislation, it is sent to the relevant tax office, which will issue and notify tax and penalty notices to the taxpayer.

2.9 What actions can the tax authorities take if the taxpayer does not cooperate in the investigation?

If the taxpayer fails to cooperate and neglects to furnish information and documents as requested by the tax inspector, the inspector will issue a second notification to the taxpayer seeking submission of the relevant documents. Failure to respond on time may result in the imposition of special irregularity penalties. If the taxpayer remains non-compliant and does not comply with the tax inspector's second request for information/documents, the implications may be more severe. Non-compliance, such as a failure to present books and documents, is treated as 'concealing books and documents', which can potentially result in charges of tax evasion and criminal proceedings.

2.10 Can the tax authorities exercise discretion in their treatment of the taxpayer in exceptional circumstances (eg, insolvency)?

There are no legal grounds for the exercise of discretion by the tax authorities in the treatment of taxpayers in exceptional cases and this is not common practice.

2.11 Do tax authorities have any leeway to settle in the course of tax investigations?

During a tax audit, if the tax inspector is satisfied with the documents, information and explanations provided by the taxpayer, he or she can write a positive report.

The legislation also provides for a settlement mechanism to resolve tax disputes and the Settlement Committee has discretion to decide on settlement.

A settlement before assessment can be requested by the taxpayer for taxes and penalties imposed in the case of a tax audit at any time during the tax audit process before signing of the closing minutes. If a settlement before assessment is achieved, litigation is precluded. It is not possible for a tax inspector to apply for a settlement during the tax audit process.

2.12 If the investigation concludes that taxes are overdue, what powers do the tax authorities have to collect them? Does this vary depending on the applicable tax?

If it is concluded from a tax audit that taxes are overdue, the relevant taxes and penalties will be imposed, including:

• the tax principal;
• tax loss penalties; and
• interest for delay.

The taxpayer may challenge the imposed taxes and penalties through a request for settlement or litigation. In order to collect finalised taxes and penalties, the tax office may use the tools provided in Law 6183 on the Procedure for the Collection of Public Receivables, including liens.

2.13 On what grounds are penalties imposed and how are these calculated?

A 'tax loss' is defined in the legislation as the late or incomplete accrual of tax due to non-performance or incorrect performance of their obligations regarding taxation by a taxpayer or a tax responsible.

If a tax loss occurs, a tax loss penalty of the amount of the tax principal is levied. If the tax loss occurs as a result of tax evasion, the applicable penalty is three times the normal tax loss penalty. In case of repeat offences, the applicable tax loss penalty will be increased by 50%. This applies if a further tax loss penalty is imposed before the end of the fifth calendar year following the date on which the previous tax loss penalty became final.

An 'irregularity' is a failure to comply with the formal and procedural provisions of the tax laws. In case of any irregularity, irregularity and special irregularity penalties are applied in amounts determined under the Tax Procedural Code.

2.14 On what grounds is interest levied and how is this calculated?

Interest for delay is applied to the outstanding taxes that are the subject of the tax litigation for the period starting from the due date, as specified in the tax laws, until the notification date of the tax court's decision. Where taxes are finalised without a need for litigation, the interest for delay is applied from the date on which the relevant tax should have been paid until the accrual of tax/penalty assessments. The interest is calculated on the tax principal and is applicable monthly at a rate of 3.5%; fractions of months are not taken into account when calculating the interest. This rate has applied since 14 November 2023; from 21 July 2022 to 14 November 2023, the applicable rate was 2.5%.

2.15 What defences are typically available to the taxpayer?

Taxpayers have the right to resort to the following administrative and judicial remedies against tax and penalty assessments that are imposed by the tax authorities within 30 days of notification:

• an application for settlement;
• the commencement of tax litigation; or
• reduced payment.

The mutual agreement procedure (MAP) is also regulated under local tax laws, allowing for the submission of applications to the Revenue Administration where it is asserted that tax has been imposed contrary to an applicable double tax treaty.

2.16 Can the results of the tax investigation have criminal implications for the taxpayer? Does this vary depending on the individual taxpayer?

In case of tax evasion, a tax audit may have criminal implications for the taxpayer.

The following acts constitute tax evasion under the law:

• false accounting in commercial books and records;
• improper or inaccurate identification of transactions in commercial books;
• concealment or falsification of commercial books and records;
• Issuing and using the misleading document through its content;
• suppression of commercial books and records; and
• forgery or use of a forged document.

For the above actions (except those outlined in the last two bullets), offenders may be subject to imprisonment for between 18 months and five years. In the case of suppression of books/records, forgery and use of a forged document, offenders may be sentenced to imprisonment for between three and eight years.

2.17 If the tax investigation has criminal implications for the taxpayer, are the answers to any of the above questions different?

The settlement provisions are not available in the case of taxes and tax loss penalties imposed due to tax evasion.

If, as a result of a tax audit, a tax inspector finds evidence of tax evasion, a criminal complaint will be made to the Prosecutor's Office and a criminal trial process might be initiated following the investigation by the Prosecutor's Office.

3 Voluntary disclosure and amnesties

3.1 Are any voluntary disclosure or amnesty programmes applicable in your jurisdiction? Does this vary depending on the applicable tax?

Taxpayers may benefit from making a declaration with penitence as a voluntary disclosure measure. By doing so, they can avoid the imposition of a tax loss penalty, as long as the tax principal together with penitence interest (at the rate of interest for delay) is paid within 15 days of making the declaration. To benefit from this rule, no denunciation must have been made and no tax audit must have commenced prior to the date of the declaration.

Tax amnesty laws are also enacted from time to time to promote voluntary tax compliance and boost tax revenues. In general, the tax amnesty laws include provisions relating to:

• finalised receivables;
• receivables that are the subject of tax litigation;
• tax audits and tax assessments;
• the tax base and tax increases (for certain types of taxes); and
• the correction of records.

4 Forum for tax disputes

4.1 In what forum(s) are tax disputes heard in your jurisdiction? Is there any choice of forum available?

There is no choice of judicial forum available. Tax disputes are resolved by the tax courts, the regional administrative courts and the Council of State, which are part of the administrative jurisdiction.

4.2 Who is the fact finder in a tax dispute? Does this change based on venue?

Administrative judicial organs (ie, tax courts, administrative courts, regional courts and the Council of State) will examine ex officio all evidence, documents and similar relating to the case file. Therefore, the fact finder in a tax dispute is the relevant judicial organ and this does not change based on venue.

5 Filing a tax dispute

5.1 What is the limitation period for filing a tax dispute in your jurisdiction?

The limitation period for filing a tax dispute is 30 days before the tax courts, provided that no separate limitation period is stipulated under a special applicable law. In the case of tax disputes, the period starts to run on the day following the notification date.

5.2 What are the formal requirements for filing a tax dispute?

A tax dispute is filed through the submission of a signed petition to the tax court, including:

• information on the parties and their attorneys;
• the subject of and reasons for the action, and the evidence on which the action is based;
• the date of notification of the administrative procedure that is the subject of the action;
• the litigated amount, type and period of the tax or tax penalty that is the subject of the action;
• the notification date; and
• the number of tax and penalty notices.

5.3 What are the procedural and substantive requirements for filing a tax dispute?

From a procedural perspective, the petition should include the information outlined in question 5.2. If the tax dispute is filed through a proxy, the attorney should be authorised by a valid power of attorney. In addition, an individual petition should be filed against each administrative act and each taxpayer should file on its own behalf through a separate petition, except in the cases outlined in question 5.4.

The substantive requirements for filing a tax dispute are as follows:

• The lawsuit should be filed with the court with the authority to review the case and the right to jurisdiction;
• The lawsuit should not be filed directly before the relevant administrative procedures before the administrative authorities have concluded;
• The plaintiff must have the capacity to file a lawsuit and a legal interest in filing such lawsuit;
• There must be a definitive and executory administrative act applicable to the taxpayer;
• The lawsuit should be filed within the limitation period; and
• The defendant should be determined accurately and identified in the petition.

5.4 Is there any possibility for collective proceedings (eg, involving several taxpayers or multiple tax assessments)?

In principle, separate tax cases should be filed for each administrative act. However, a single lawsuit can be filed for multiple administrative acts that have a pecuniary or legal interdependence or a cause-and-effect relationship. For instance, it is general practice to file a single lawsuit against value-added tax assessments relating to various periods in one fiscal year, based on several notifications issued by the same tax office, in accordance with the same tax inspection report.

For more than one person to file a single lawsuit with a joint petition:

• the individuals must have the same rights and interests; and
• the event or legal reason giving rise to the lawsuit must be the same.

In tax disputes, this generally arises in cases:

• involving joint or participatory real estate ownership;
• relating to joint and several liability; or
• filed jointly by persons whose interests are affected by general regulatory transactions.

5.5 Must the sum in contention be paid into court before a tax dispute is filed?

A taxpayer need not deposit the sum in contention or part thereof to the court before filing a tax dispute.

5.6 Has the filing of a tax dispute any effect on the payment of tax or the collection possibilities for the authorities?

Whether filing a tax dispute affects the payment or collection of taxes will depend on how and against which administrative act the tax litigation is filed.

If the tax litigation is filed against a tax/penalty assessment, payment of the assessed amounts will cease, as execution of the administrative act will automatically be suspended. However, interest for delay – which is calculated from the date on which the relevant taxes should have been paid to the date of payment – will continue to accrue during the suspension period. If an unfavourable decision (upholding the tax and penalty assessment) is rendered by the first-instance tax court, the tax and penalties imposed will become payable with the interest for delay upon notification of a second tax/penalty notice by the tax office.

However, if the tax litigation concerns a payment order or against taxes assessed upon a declaration with reservation, the filing of the tax dispute will not suspend the collection of taxes.

5.7 If the tax dispute is decided in favour of the authorities, is late interest due if the tax has not been settled? If the tax dispute is decided in favour of the taxpayer and the tax had already been settled, is interest due by the state?

Taxes that have not been paid by the taxpayer will become payable with interest for delay if the tax court decides against the taxpayer and in favour of the tax authorities. Taxes that have already been paid by the taxpayer, unlawfully and excessively, will be refunded by the tax authorities along with the deferred interest, calculated from the date of payment of the excessive taxes until the notification date of the correction receipt.

6 Disclosure and privilege

6.1 What rules apply to disclosure in your jurisdiction? Do any exceptions apply?

The courts may issue an interim decision requesting the parties or other relevant authorities to provide all documents and information that they consider necessary within a specified timeframe and the recipient must comply accordingly. However, if additional information and documents are requested that relate to the security or national interest of the Turkish state or a foreign state, the Turkish president or the relevant vice president or minister may refuse to provide such information, as long as the grounds for such refusal are notified.

6.2 What rules on third-party disclosure apply in your jurisdiction?

Please see question 6.1. If a party fails to fulfil the requirements of an interim decision, the effect of this failure on the decision will be evaluated by the court and this issue will be dealt with separately in an interim decision.

6.3 What rules on privilege apply in your jurisdiction?

Please see question 6.1.

7 Evidence

7.1 What types of evidence are permissible in tax disputes in your jurisdiction? Is expert evidence accepted?

According to Turkish tax law, the courts will consider the true nature of the taxable event and related transactions. In doing so, they will consider all kinds of evidence except oath, including books and documents such as:

• invoices;
• self-employment receipts;
• payrolls;
• ledgers;
• declarations;
• notifications; and
• other documents that taxpayers must keep.

In addition, witness statements cannot be used as evidence and or accepted as the basis for a decision if the relevance of the witness to the taxable event is not considered to be true and accurate.

Expert opinions/reports on technical issues may be requested by one of the parties to the tax dispute and submitted to the court. The court may also request an expert opinion directly itself. Both types of expert opinions are legally classed as 'discretionary proof', meaning that the expert's conclusions are not binding on the court, which is free to issue a judgment independent from the expert opinions.

7.2 What is the applicable standard of proof?

The applicable standard of proof will depend on the essence of the tax dispute. However, as mentioned in question 7.1, the taxpayer should first try to prove its claims through the legal books and documents relating to the taxable event and income.

7.3 On whom does the burden of proof rest?

If a claim does not meet the applicable economic, commercial or technical requirements or is not normal and customary considering the nature of the event, the burden of proof rests with the party claiming it. If that party fails to meet the burden of proof, the relevant event or transaction is deemed not proven.

In addition, although the burden of proof rests with the parties, the tax court must examine the case ex officio.

8 Proceedings

8.1 Are tax proceedings in your jurisdiction public or private? If the former, are any options available to the parties to keep the proceedings or related information confidential?

The case file is private, except to the parties to the case and the attorneys authorised to follow the relevant case. However, in principle, the hearings in tax disputes are open to the public, except where reasons of public moral or public security require that part or all of the hearing be held in private by decision of the competent chamber or court. In addition, with respect to the details of the proceedings and the information in the case file, attorneys have a right to review the case files, although not to obtain copies thereof.

8.2 How do the proceedings unfold in your jurisdiction?

Upon submission of the petition to the tax court, the court will conduct a pre-assessment of the petition with regard to issues such as:

• its authority to review the case;
• the authority of the plaintiff to file the case;
• whether the case has been filed within the statutory limitation period; and
• whether the case involves an administrative act that can be subject to litigation.

Thereafter, the tax court will notify the defendant of the petition and request it to submit a response within 30 days; the plaintiff also has a right to reply to the defendant's response. Following the completion of this petition exchange process, the tax court will evaluate the claims and responses of the parties and may request additional documents at any time during the proceeding. A hearing date is then set by the court and notified to the parties. During the hearing, the parties present their claims and responses to the court verbally. The parties may submit additional documents/petitions any time during the proceeding until the court issues its decision. The decision will be issued and notified to the parties within a maximum of one to two months of the hearing date.

For details of the appeal process, please see question 10.1.

8.3 What is the typical timeframe for proceedings?

The timeframe for proceedings may change depending on the workload of the tax court and the forum in which the tax case is filed.

However, in general, the process before the first-instance tax court takes approximately one year. If certain monetary requirements are fulfilled (please see question 10.1) and the case is brought before the second-instance tax court on appeal, this process takes approximately one year. If the appeal threshold is exceeded and the case is appealed to the Council of State, this process takes approximately one to two years.

8.4 Are settlements possible between the taxpayer and the tax authorities once judicial proceedings have been opened?

In principle, settlements with the tax authorities are not possible once judicial proceedings have commenced.

However, a tax dispute can still be terminated following the commencement of judicial proceedings through a 'withdrawal of legal remedies'. According to the relevant regulation, if the taxpayer withdraws from legal remedies (by not appealing the decision) in cases initiated against a tax/penalty assessment, the tax and penalties will be reduced at certain rates.

8.5 Do the courts in your jurisdiction have full power to review facts and legal questions?

The administrative courts have full power to review facts and legal questions, considering that the administrative judicial organs (ie, the tax courts, administrative courts, regional courts and the Council of State) must examine ex officio all evidence, documents and similar relating to the case file.

9 Remedies

9.1 What remedies are available in tax disputes in your jurisdiction?

The remedies available in tax disputes include:

• removal of the imposed tax and penalties;
• cancellation of the administrative act, accrual or similar; and
• a refund of excessively paid taxes together with the applicable deferred interest.

9.2 What factors will the court consider in deciding on the appropriate remedies?

In evaluating the merits of the case, the tax court will decide on the appropriate remedies. If it decides that the taxpayer has been deprived of a monetary sum due to the excessive payment of taxes, there are grounds to order the payment of interest.

10 Appeals

10.1 Can the decision of the court be appealed? If so, on what grounds and what is the process?

There is a three-layered legal remedies system in Türkiye, where the decision of the courts can be appealed before a higher court. The stages of tax disputes in Türkiye are as follows:

• Tax court: If the amount in dispute is under TRY 31,000 (for 2024), the tax court's decision cannot be appealed and will be final.
• Regional administrative court (RAC): If the amount in dispute is between TRY 31,000 and TRY 920,000 (for 2024), the tax court's decision can be appealed to the RAC, whose decision will be final. If the RAC considers that the first-instance decision is compliant with the law, it will reject the request for appeal. However, if it finds that the first-instance decision is not compliant with the law, it will accept the request for appeal and overturn the tax court's decision by rendering a new decision on the merits of the case.
• Council of State: If the amount in dispute exceeds TRY 920,000 (for 2024), the RAC's decision can be further appealed before the Council of State, which will render a final decision. If the Council of State finds the RAC's decision lawful, the decision will be approved; but if the decision is found unlawful, it will be overturned and sent back to the RAC for re-evaluation.

The monetary thresholds listed above are increased each year based on the revaluation rate.

11 Costs, fees and funding

11.1 What costs and fees are incurred in tax disputes in your jurisdiction? Can the winning party recover its costs?

When filing a tax dispute, the taxpayer must pay:

• an application fee along with posting expenses (TRY 427.60 and TRY 870 respectively); and
• the applicable fees for a power of attorney (TRY 156.8).

Where a stay of execution or a hearing is requested by the taxpayer, the posting expenses will be higher. If the tax court rules against the taxpayer and its decision is appealed to the RAC and the Council of State, additional appeal fees will be payable, as follows:

• The appeal fee before the RAC is TRY 1,239.30; and
• The appeal fee before the Council of State is TRY 1,863.

The tax courts will impose a sum which is equal to the application fee (TRY 427.60) on the losing party.

In addition, as per the Minimum Attorneyship Fee Tariff, the tax courts will impose fixed attorneys' fees on the losing party, as follows:

• TRY 20,900 where a hearing is held; and
• TRY 10,500 where no hearing is held.

11.2 Are contingency fees and similar arrangements permitted in your jurisdiction?

Contingency fees and similar arrangements are permitted in Türkiye, subject to the minimum attorneys' fees determined specifically for each type of dispute under the Minimum Attorneyship Fee Tariff.

11.3 Is third-party funding permitted in your jurisdiction?

Third-party funding is not permitted for tax disputes in Türkiye.

12 International tax disputes

12.1 What is your jurisdiction's position on the resolution of international tax disputes (eg, advance pricing agreements, mutual agreement procedures, arbitrations)?

Advance pricing agreements (APAs) and the mutual agreement procedure (MAP) are applicable in Türkiye. Details on the availability of APAs and the MAP can be accessed in the Organisation for Economic Co-operation and Development's "Türkiye Dispute Resolution Country Profile" at https://www.oecd.org/tax/dispute/turkiye-dispute-resolution-profile.pdf. However, few disputes are resolved through the MAP in Türkiye (statistics are available at www.oecd.org/tax/dispute/mutual-agreement-procedure-statistics-2022-per-jurisdiction.html#othercases).

Arbitration is not available for the resolution of tax disputes in Türkiye.

12.2 Has your jurisdiction implemented the Organisation for Economic Co-operation and Development (OECD) minimum standards with respect to international tax dispute resolution or is it a party to other agreements in this respect?

All double tax treaties (DTTs) that Türkiye has signed include a MAP provision and are largely consistent with the requirements of the Base Erosion and Profit Shifting Action 14 minimum standards. To fully satisfy the requirements for an effective dispute resolution mechanism under Action 14, Türkiye has:

• signed the Multilateral Instrument; and
• announced its intention to update all of its tax treaties to ensure compliance with the minimum standards.

However, Türkiye has no specific plan in place in this regard; nor has it taken or planned any specific actions for such negotiations. Please see "Making Dispute Resolution More Effective – MAP Peer Review Report, Turkey (Stage 2)" at https://www.oecd.org/tax/making-dispute-resolution-more-effective-map-peer-review-report-turkey-stage-2-6dd47527-en.htm.

12.3 Does your jurisdiction's position differ significantly from Article 25 of the OECD Model Tax Convention (including commentary)? If so, in what respects?

For the purpose of regulating tax refunds, with respect to Article 25(2) of the OECD Model Tax Convention, Türkiye has reserved the right to require taxpayers to apply to the competent tax officer within one year in order to claim any tax refund that has resulted from any mutual agreement reached.

In addition, Turkish law diverges from Article 25(5), which provides that where the competent authorities are unable to reach agreement, the unresolved issues can be resolved through an arbitration process. This possibility does not exist under Türkiye's DTTs, as arbitration of tax disputes is not permitted in Türkiye.

12.4 How do domestic and international tax dispute resolution mechanisms interplay in your jurisdiction?

The domestic MAP provisions follow the MAP provisions set out in the DTTs to which Türkiye is a signatory. According to these provisions, as an alternative administrative remedy, a taxpayer can apply to the Turkish Revenue Administration claiming that:

• a tax has been imposed against the provisions of the relevant DTT; or
• the taxpayer has strong evidence of this.

Such an application can also be filed with the competent authority of the other contracting state, as per the provisions of the relevant DTT.

To be considered, a MAP application should be made in line with the procedures set out in the relevant DTT and within the legal period specified in the DTT. If no application period is stipulated under the DTT or if the DTT refers to local law, the application should be made within three years of the taxpayer learning that the tax assessment is not in line with the provisions of the DTT.

13 Trends and predictions

13.1 How would you describe the current tax dispute landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

In response to Base Erosion and Profit Shifting Pillars 1 and 2, amendments to the Turkish tax regime are expected. In particular, to introduce the global minimum effective tax rate in accordance with the Pillar 2 solutions, Türkiye has been exploring the following potential alternatives with a view to implementing them in national law:

• the income inclusion rule;
• the undertaxed payment rule; and
• a qualified domestic minimum top-up tax.

In addition, following the global trend, Türkiye plans to begin taxing digital services. In this regard, an increase in tax audits of natural persons who generate an income from e-commerce is anticipated.

New legislation on crypto assets is also expected to be enacted, followed by regulations on their taxation.

14 Tips and traps

14.1 What would be your recommendations to parties facing a tax dispute in your jurisdiction and what potential pitfalls would you highlight?

Tax disputes involve three main stages:

• prevention;
• management; and
• resolution.

The first phase aims to prevent tax disputes from arising by remaining tax compliant – in particular, by:

• keeping abreast of updates in domestic and international legislation, from the draft stage onwards; and
• developing tax-compliant tools and evaluating their impact on the business.

The second phase involves the effective management of issues that may result in a tax dispute. For instance, where a company is subject to a tax audit, the process must be managed properly and delicately from the outset, considering the possible impact on any subsequent tax litigation.

Lastly, in case of a tax dispute, companies should analyse the available administrative and legal remedies in detail and determine the best fit for their needs with the support of tax professionals/tax lawyers, considering factors such as:

• the dynamic tax landscape in Türkiye;
• operational aspects; and
• financial impacts.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.