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Legal Alerts

The First Regulation on Mutual Agreement Procedure in Turkey!

Legal Alerts

The Law No. 7338 on Certain Amendments on Tax Procedural Law and Certain Laws (“Law No. 7338”), published in the Official Gazette dated October 26, 2021, introduced the first regulations on mutual agreement procedures (“MAP”), provided under double tax treaties, in Turkey. These regulations, involving provisions ranging from how to apply for MAP to the effects of that application on the periods for filing a lawsuit, aims to clarify uncertainties regarding MAP and ensure the effective use of MAP for cross-border taxation transactions.

New Development

The Law No. 7338 introduced a new section entitled “Mutual Agreement Procedure” in the Tax Procedural Law No. 213 (“TPL“). The provisions introduced within this section are as follows:

Application Procedure for MAP

  • Taxpayers can apply to the Revenue Administration for MAP, with the claim that a taxation is made against the provisions of a duly ratified double tax treaty or that there are certain indicators of a possible taxation against the double tax treaty. Depending on the provisions of the double tax treaty, taxpayers can also apply to the competent authorities of the other contracting state of the related double tax treaty.
  • The application for MAP should be made within the period and procedure provided under the related double tax treaty. If there is no provision under the agreement or the agreement refers to the domestic law, taxpayers should apply for MAP within three years starting from the moment the taxpayer is informed of the taxation subject to the MAP. In any case,  taxpayers must apply within the period provided in the double tax treaty or at the end of the three years (if no time limit is provided in that agreement) starting from the date when:
    • the tax/penalty notifications are made;
    • the tax arising from a tax return with a reservation clause is accrued; and
    • the withholding is made, in cases of a tax withholding.
  • If it is possible to separate the taxation into the tax base and tax type, taxpayers can apply for the MAP only for the portion that falls under the related double tax treaty.

Conclusion of the MAP and Certain Matters

  • If the Revenue Administration and the competent authority of the other contracting state come to an agreement during the MAP, the agreement will be notified to the taxpayer.
  • Upon this notification, taxpayers should also make a notification within thirty days as to whether they accept or reject the agreement. If no notification is made, the taxpayer will be deemed to have rejected the agreement.
  • The mutual agreement will be deemed concluded if the taxpayer accepts the agreement. In that case:
    • The taxes and penalties subject to the agreements should be adjusted, regardless of the periods of limitation.
    • Delay interest is applicable for the period starting from the actual due date of the related taxes to the date when the taxpayer accepted the agreement.
    • Taxpayers cannot file a lawsuit, cannot make any complaints to any bodies and cannot benefit from the reconciliation or the reduction provided under Article 376 of the TPL for the matters subject to the agreement and adjusted taxes and penalties.
    • Taxpayers should pay the agreed taxes and penalties within one month following the notification of the adjusted tax and penalties. If the full amount of the taxes is paid in time, together with the half of the penalty, half of the penalty will be written off.
  • Application for MAP also retains the period of limitations provided under TPL regarding the taxes and penalties subject to the application. The retained periods of limitation continue, from where they remained, as of when the taxpayer rejects or is deemed as rejected the agreement.
  • Taxpayers can withdraw the MAP application under the condition that they do not accept the agreement. The retained terms and periods of limitation continue running upon the withdrawal from the MAP application and the taxpayer can avail of other remedies provided under the TPL.
  • The application for MAP does not affect the collection of the accrued taxes and penalties.

Effects of an Application for MAP on Filing a Lawsuit or a Previous Application for Reconciliation

  • An application for MAP halts the term for filing a lawsuit for the taxes and penalties and accruals, made upon a tax return filed with a reservation clause, subject to the application. If the application is rejected or if no agreement is achieved between the contracting states, this will be notified to the taxpayer in written and the term for filing a lawsuit continues as of that written notification.
  • If the taxpayer rejects or is deemed as having rejected the agreement, as of the end of the thirty days within which the taxpayer should make a notification on whether it accepts or rejects the agreement, the term for filing a lawsuit starts running from where it had paused.
  • If less than fifteen days are left as the term for filing a lawsuit when the term starts running again, the lawsuit should be filed within fifteen days as of when the term starts running again.
  • If the taxpayer files a lawsuit before the application for MAP, the court should wait for the conclusion of the MAP. The tax administration will notify the conclusion of the MAP and the court will continue to the judicial process if no agreement is achieved.
  • If the court renders a decision without waiting for the conclusion of the MAP, conclusion of the MAP should be taken into account instead of the court’s decision.
  • If the taxpayer applies for reconciliation before the application for MAP, the reconciliation should be postponed until the conclusion of the MAP. The taxpayer may request to reconcile without waiting for the MAP’s conclusion. In that case, the taxpayer is deemed as waived from the MAP application. While the taxpayer cannot apply for MAP if a reconciliation is achieved, it can apply for MAP again if no reconciliation is achieved.


MAP needed further regulation under the Turkish tax law despite being provided under double tax treaties. The provisions introduced with the Law No. 7338 shed light on uncertain and disputed matters regarding the MAP. The provisions are expected to ensure that MAP will become a more effective and common method in Turkish tax practice.