Tax disputes in Türkiye arise when taxpayers and the tax administration disagree on tax assessments, audits, penalties or the interpretation of tax laws. The Turkish tax system is based on self-assessment, whereby taxpayers are responsible for calculating and declaring their tax liabilities. This system is complemented by the powers of the Turkish Revenue Administration (Gelir İdaresi Başkanlığı or GİB) to conduct tax audits and issue additional or ex officio assessments. In practice, tax controversies most commonly arise following tax inspections, where the tax authorities challenge the accuracy of filed returns and the taxpayer’s interpretation or the nature of transactions. Disputes may also result from incorrect or disputed assessments, non-payment of tax, disagreements over the validity or timeliness of tax notifications, withholding obligations, reassessments, refund claims, and other administrative decisions.

In Türkiye, tax controversies predominantly arise in relation to corporate income tax and VAT. Corporate income tax disputes are typically high-value and complex, often involving issues such as the deductibility of expenses and the recharacterisation of transactions. Transfer pricing has become a key area of controversy, particularly for multinational groups.

VAT disputes also represent a significant portion, especially with regard to exemptions, deductions, cross-border transactions, and refund claims. Withholding tax disputes arise particularly in cross-border contexts and may involve significant amounts. Individual income tax, stamp duty, and property taxes generally give rise to lower-value and more routine disputes, while customs duties can involve significant amounts depending on the industry.

Tax controversy risks in Türkiye can be mitigated primarily through proactive compliance. This includes ensuring accurate tax filings, proper classification of income and expenses, and the correct application of exemptions and incentives. Seeking early advice from tax professionals is particularly important for complex or cross-border transactions.

Taxpayers may also request private rulings (özelge) from the tax authority on the application of tax law to their specific circumstances. A private ruling issued to a taxpayer provides protection against penalties and interest for the period covered, provided that the taxpayer has accurately described the facts.

Finally, strong documentation and internal tax control systems are essential. Maintaining proper records – especially for transfer pricing, VAT refunds and deductible expenses – helps prevent disputes and reduces risks.

Türkiye has actively integrated the OECD’s Base Erosion and Profit Shifting (BEPS) recommendations into its domestic tax legislation, focusing heavily on transfer pricing documentation and, more recently, the implementation of a 15% global minimum tax (Pillar Two) for large multinational enterprises (MNEs). The administration currently relies on country-by-country reporting (CbCR) data and automatic exchange of information under the Common Reporting Standard (CRS) to identify avoidance risks. These reforms have enhanced the administration’s capacity for targeted audits, particularly in transfer pricing and cross-border transactions. Türkiye signed the BEPS Multilateral Instrument (MLI) in 2017, but it has not yet been ratified. Its anti-abuse provisions, including the Principal Purpose Test, are therefore not yet legally binding in Türkiye. The precise impact of the OECD BEPS project on tax controversies in Türkiye is difficult to quantify, as many reforms are recent and administrative practice continues to develop. That said, disputes relating to cross-border transactions are expected to increase.

Additional tax assessments in Türkiye arise primarily from post-audit adjustments within a five-year statute of limitations. Taxpayers have 30 days to object to or settle assessments after receiving a notification.

An important feature is that filing a case before the tax courts automatically suspends the collection of the disputed tax, duties and associated penalties. This suspension applies without the need to provide a guarantee, distinguishing Türkiye from many jurisdictions. If the case is decided against the taxpayer, the tax office will begin collection proceedings.

Failure to declare and/or pay taxes in due time may trigger both administrative penalties and, in more serious cases, criminal liability:

• Administrative sanctions under the Tax Procedural Law No 213 (TPL) include tax loss penalties that are typically equal to the unpaid tax (and increased in aggravated cases) as well as irregularity and special irregularity fines.
• Criminal proceedings may arise in cases of tax evasion, such as fraudulent bookkeeping, use or issuance of false invoices, and concealment or destruction of accounting records. These offences may lead to imprisonment, and criminal proceedings run independently from administrative tax assessments and litigation.

In Türkiye, tax audits are primarily determined through a risk-based approach applied by the Tax Audit Board (Vergi Denetim Kurulu or VDK) using systems such as the Risk Analysis System and KURGAN. These systems analyse financial data, sectoral comparisons and compliance behaviour to identify “high-risk” taxpayers. Indicators include profit levels deviating from industry benchmarks, unusually high deductions, inconsistencies in filings and anomalies detected through digital systems.

Audits may also be triggered by external factors such as third-party complaints, findings from routine tax office controls, and requests from courts or other authorities.

In addition, the administration may conduct sector-specific or periodic audits under certain criteria. Overall, increasing digitalisation, including systems like KURGAN (Institutional Supervised Analysis System, an AI-powered platform launched by the VDK in 2025), has made audit selection more data-driven and targeted, reducing reliance on random selection.

Corporate restructuring transactions – including mergers, demergers, partial demergers, asset transfers and share exchanges – represent a distinct and increasingly significant audit trigger in Türkiye. The tax-neutral treatment of these transactions under Articles 19 and 20 of the Corporate Tax Law is subject to strict conditions, and the administration scrutinises whether the substantive requirements for tax neutrality have been met.

In Türkiye, tax audits are initiated under the TPL, typically based on risk analysis conducted by the VDK using financial data, compliance behaviour, inconsistencies in filings and external information.

Tax audits are governed by a five-year statute of limitations, which begins on the first day of the calendar year following the relevant tax year. Once this period expires, the tax authority loses the right to make an assessment. The statute of limitations does not prevent the initiation of an audit as such; however, it effectively limits its outcome, as any tax assessment must be issued within the statute of limitations period.

Tax audits must be completed within the following timeframes from the date the audit commences: one year for full audits, six months for limited audits, and three months for VAT refund audits. Where an audit cannot be completed within these periods, an extension may be granted by the relevant supervisory unit upon a reasoned request submitted at least ten days before the deadline – up to six additional months for full and limited audits, and two additional months for VAT refund audits. The taxpayer must be notified in writing of the reasons for the extension. A tax audit does not suspend or interrupt the statute of limitations; therefore, the assessment must be completed within the five-year period regardless of the audit process.

Tax audits in Türkiye are primarily conducted at the tax authority’s offices. However, audits may also be carried out at the taxpayer’s premises where the nature of the audit requires on-site examination or where the taxpayer requests it and suitable conditions exist. In practice, office-based audits have become the norm, particularly as the administration increasingly relies on electronic data analysis rather than physical document inspection.

During audits, taxpayers are required to provide access to their accounting books, records, and supporting documents. These may be reviewed in either printed or electronic form, depending on how the taxpayer maintains its records.

Auditors now routinely conduct data-driven analyses of electronic records, cross-referencing transaction data across multiple sources, either before or alongside any physical document review.

In Türkiye, during tax audits the VDK focuses on both formal compliance and the substantive accuracy of the taxpayer’s tax position, aiming to ensure that declared results reflect the underlying economic reality.

Auditors verify tax returns have been filed accurately and on time. Accounting records are examined for completeness and consistency with Turkish tax and accounting rules, confirming that all transactions are properly documented. The legitimacy and compliance of invoices and supporting documents are reviewed to ensure that reported revenues and expenses are lawfully substantiated. Compliance with mandatory electronic reporting systems is also assessed, and auditors routinely cross-reference electronic records across multiple data sources to identify discrepancies.

The auditors also examine whether transactions are supported by reliable documentation, including contracts, bank records and payment evidence. Attention is given to related-party transactions, where transfer pricing documentation must demonstrate arm’s length pricing. Payroll and employment records are also reviewed for correct tax and social security treatment.

The determination of the tax base and the accuracy of tax calculations are closely inspected. Auditors verify whether exemptions and incentives, such as R&D credits, investment allowances and free zone benefits, have been correctly applied, and whether expenses claimed as deductible do not in fact qualify as non-deductible items under Turkish tax law. Special focus is placed on high-risk areas such as cross-border transactions, VAT treatment, customs-related issues, and transfer pricing, ensuring consistency with market conditions and accurate reporting.

Lastly, the reintroduction of mandatory inflation adjustment for financial statements from 2024 onwards has created a new substantive audit area. Auditors examine whether inflation adjustments have been correctly calculated and reflected in tax returns, and whether the interaction between inflation-adjusted figures and existing exemptions or deductions has been properly handled.

It is difficult at this stage to assess whether the increasing prevalence of rules on cross-border exchanges of information and mutual assistance between tax authorities has led to a marked increase in tax audits in Türkiye, as official data is not publicly available. However, it is generally considered that enhanced international administrative co-operation may result in a higher number of audits triggered by information or queries exchanged between jurisdictions.

In practice, while exchanged information is increasingly used in audit processes, tax audits conducted jointly with foreign tax authorities or involving seconded officials remain limited. The Turkish tax administration generally conducts audits independently, although it may rely on information obtained through international exchange mechanisms.

From a strategic perspective, several key points are important during tax audits in Türkiye:

• Identifying the likely audit focus at an early stage is important for effective preparation.
• Turkish tax audits place strong emphasis on the taxpayer’s ability to substantiate positions with complete and consistent evidence, including invoices, contracts, bank records and payroll documentation. Ensuring alignment between documentation and declared tax positions is essential.
• Audit communication is formal and document driven. Responses to information requests should be carefully prepared, fully supported and consistent with underlying records to effectively manage audit risk.
• Engaging a tax lawyer from the earliest stage of an audit, ideally upon receipt of the first information request or audit commencement notice, provides significant strategic advantages. A tax lawyer can assess the legal merits of the administration’s position, identify procedural irregularities that may affect the validity of the audit or any resulting assessment, and ensure that communications with auditors do not inadvertently create admissions or concessions that may be difficult to retract in subsequent proceedings.

In Türkiye, after an additional tax assessment and penalty notification, the taxpayer has 30 days to act. Within this period, several administrative remedies are available before (or instead of) initiating judicial proceedings. In practice, while these administrative mechanisms are not strictly mandatory in all cases, they are commonly used before litigation and may affect the timing and scope of a court case.

Reconciliation Options

Taxpayers may apply for pre-assessment or post-assessment reconciliation. Where the assessment arises from a tax audit, the taxpayer may apply for pre-assessment reconciliation after the draft audit report has been issued but before the formal assessment and penalty notices are served. Following notification of the assessment and penalty, taxpayers may apply for post-assessment reconciliation within 30 days. If an agreement is reached in one of these reconciliation procedures, the dispute is settled and cannot be challenged in court.

A significant legislative change introduced by Law No 7524 removed the tax principal from the scope of reconciliation. So, reconciliation is now only available in respect of tax loss penalties and, where they exceed the statutory threshold, irregularity and special irregularity penalties.

Penalty Reduction (Article 376 of TPL)

Taxpayers may request a reduction of tax loss, irregularity and special irregularity penalties by accepting the assessment and paying within the prescribed period. This option excludes reconciliation and judicial remedies for the reduced amounts.

Direct Access to Tax Courts

Where the taxpayer does not pursue any of the above mechanisms, or where reconciliation fails, the taxpayer may file a lawsuit before the tax court within 30 days of notification of the assessment and penalty. Turkish tax legislation does not require a mandatory administrative objection phase before access to the courts; the taxpayer may proceed directly to litigation.

Correction of Errors

When there is no assessment but a clear factual or calculation error in a tax procedure, rather than a substantive legal disagreement, the taxpayer may apply to the relevant tax office for correction under Article 122 of the TPL. This mechanism is limited in scope to defined categories of “tax error” and must be exercised within five years of the relevant tax act. It is not available as a route to challenge the merits of an assessment.

Decision Period of the Administration and Tacit Negative Decision

Under Article 10 of the Administrative Jurisdiction Procedures Law (IYUK), individuals may apply to administrative authorities for the issuance of an administrative act or the performance of an administrative action that may be subject to judicial review. If the administration fails to respond within 30 days, a tacit negative decision is deemed to have occurred, or if an explicit rejection is issued, the taxpayer may file a lawsuit before the tax courts.

Under Article 11 of the IYUK, before filing an administrative lawsuit, individuals may request from the higher authority (or, if no higher authority exists, from the authority that issued the act) annulment, withdrawal, amendment of the administrative act, or the issuance of a new act within the statutory time limit for filing a lawsuit. This application suspends the running of the administrative litigation period. If no response is given within 30 days, a tacit negative decision is deemed to have occurred.

Access to Judicial Review

If the administration fails to respond within 30 days, a tacit refusal arises. Following this, or if an explicit rejection is issued, the taxpayer may file a lawsuit before the tax courts. According to Article 7 of the IYUK, the time limit for filing a tax lawsuit is 30 days. If the administration responds within the maximum four-month period, a new 30-day limitation period starts from the notification of this response. If no action is taken by the administration within this period, the claim becomes final due to either tacit or explicit rejection, and judicial review may proceed on that basis.

In Türkiye, judicial tax litigation is initiated after administrative remedies have been pursued or bypassed within the statutory deadlines. Administrative mechanisms such as reconciliation are not mandatory prerequisites, a taxpayer may proceed directly to the tax courts without first exhausting any administrative route.

A lawsuit must generally be filed within 30 days from notification of the tax assessment or penalty notice. Where the taxpayer has pursued post-assessment reconciliation and no agreement was reached, the period is shortened to 15 days from the date of the reconciliation meeting. Where an error correction request has been explicitly or implicitly rejected, the taxpayer has 30 days from the rejection to file.

Proceedings are initiated by submitting a written petition to the competent tax court. The petition must identify the contested tax assessment or penalty, set out factual and legal grounds, and include supporting documentation. It may be filed by the taxpayer or an authorised attorney, and the case is formally opened once the required fees are paid and the court registers the application.

Tax courts have first-instance jurisdiction over disputes concerning tax assessments, penalties, and collection measures, determined mainly on a territorial basis.

In Türkiye, tax litigation is primarily conducted through a written procedure, and courts generally decide cases based on the case file rather than oral hearings.

The procedure starts with the filing of the lawsuit petition. The court first conducts a preliminary review to ensure procedural compliance, then serves the petition on the tax authority. The administration is given a statutory period of 30 days to submit its defence, followed by written exchanges between the parties (reply and rejoinder stages).

After the written phase is completed, the court may request additional documents, carry out its own examination, or appoint an expert where technical issues arise. After deliberation, a reasoned written judgment is issued and notified to the parties.

Although hearings are possible upon request, they are not the norm and remain at the court’s discretion. When held, they serve only to complement the written record rather than replace it, and there is no oral examination of witnesses in the manner typical of common law proceedings.

Documentary Evidence

In Turkish tax litigation, documentary evidence is the primary and dominant form of proof, as established under Article 3/B of the TPL. As a rule, all supporting documents must be submitted with the initial lawsuit petition, and the tax administration is expected to submit its evidence together with its defence. Late submission is only accepted in exceptional cases at the court’s discretion. The court may also request additional documents ex officio or from third parties, and the outcome of disputes largely depends on the completeness of the written documentary record.

Witness Evidence

Witness evidence plays a very limited role. Tax disputes are generally resolved based on written documentation rather than oral testimony. Where witness statements are exceptionally admitted, they are typically limited to people directly connected to the transaction and are assessed alongside the documentary evidence. There is no structured cross-examination system comparable to common law procedures.

In Turkish tax litigation, the burden of proof is governed by Article 3/B of the TPL and is based on an economic substance approach. Where a party claims that a transaction deviates from normal economic, commercial or technical conditions, the burden of proof lies with that party. If the taxpayer’s position is consistent with ordinary commercial practice, the burden shifts to the tax administration to prove otherwise.

In practice, where the tax authority challenges a transaction as lacking economic substance, it must substantiate its claim with evidence. However, where taxpayers rely on deductions, exemptions or incentives, they must demonstrate that the relevant legal conditions are met.

In criminal tax cases, the burden of proof rests entirely with the prosecution.

Since proceedings are written and evidence is generally submitted with the initial petition, it is strategically important that taxpayers present a complete documentary record at the outset. Later submission of evidence is procedurally limited and may weaken the position of the party relying on it.

Filing a lawsuit before the tax courts generally suspends collection of the disputed tax and penalties under Article 27/4 of the IYUK, allowing litigation without immediate payment. However, this automatic suspension does not apply where the assessment is based on a return filed under protest, in which case a separate stay request is required.

In complex disputes, expert reports may be strategically important. Although courts may appoint their own experts, taxpayer-submitted reports help establish the technical framework early and address potential weaknesses in the administration’s position.

Domestic Jurisprudence

Turkish courts do not operate under a formal doctrine of binding precedent. However, decisions of the Council of State (Danıştay), as the highest administrative court, carry considerable persuasive authority and are generally followed by tax courts and regional administrative courts where a consistent line of case law exists. Decisions of the Tax Chambers of the Council of State and the plenary decisions of its Tax Law Chambers Council (Vergi Dava Daireleri Kurulu) are particularly influential and in practice function as near-binding guidance for lower courts.

International Courts and Foreign Jurisprudence

Decisions of the European Court of Human Rights are occasionally considered as persuasive authority, particularly in relation to procedural rights and the protection of property.

Academic Doctrine

Academic commentary and scholarly opinions may be considered by courts, particularly where the legal question is novel or where there is an absence of settled case law. Their weight varies depending on the authority of the source and the specific court, and they do not constitute binding authority.

OECD Materials and International Guidelines

As an OECD member, Türkiye’s courts and tax administration treat OECD materials as persuasive interpretive tools, particularly in cross-border disputes. The OECD Model Convention Commentaries are referred to in treaty interpretation, and the OECD Transfer Pricing Guidelines are treated as an important reference point in transfer pricing cases. These materials are not legally binding on Turkish courts and their application is not uniform, their influence varies depending on the court and the specific dispute.

Administrative tax litigation in Türkiye operates through a three-tier court system consisting of tax courts (first instance), regional administrative courts (second instance), and the Council of State (final appellate authority).

Tax courts hear disputes concerning tax assessments, penalties and collection procedures at first instance. Their decisions may be appealed to the regional administrative courts. Decisions of the regional administrative courts may then be further appealed to the Council of State, which serves as the highest administrative court and ensures consistency in legal interpretation.

The availability of each level of appeal depends on monetary thresholds that are updated annually by reference to the statutory revaluation rate. The thresholds applicable to a given case are determined by reference to the date on which the action was brought, not the date of judgment, following amendments introduced by Law No 7550 of 4 June 2025, which resolved a long-standing constitutional dispute on this point. In practice, most commercially significant tax disputes exceed the upper threshold and therefore proceed through all three levels of review.

In Turkish tax appeal procedures, the first stage is an appeal before the regional administrative court. Following a tax court decision, either party may file an appeal within 30 days of notification by submitting a written petition setting out the grounds of challenge, supported by arguments and evidence. The court first conducts a preliminary review for admissibility and procedural compliance, then proceeds to a substantive examination, mainly based on the written file. The court may uphold, amend, or overturn the first-instance decision, and its judgment is served on the parties.

Where the relevant monetary threshold is met, a further appeal may be lodged before the Council of State within 30 days of notification of the regional administrative court’s decision. The Council of State reviews the case primarily on points of law, assessing the legality and consistency of lower court decisions. It may reverse the decision and remit the case or, in certain circumstances, issue a final ruling. Its decisions are final at the domestic level.

Additionally, once all ordinary appellate remedies have been exhausted, taxpayers may lodge an individual application with the Constitutional Court on the grounds that a fundamental right guaranteed by the Turkish Constitution or the European Convention on Human Rights has been violated. In the tax context, the most frequently invoked rights are the right to property and the right to a fair trial.

In Türkiye, judges in tax litigation are appointed by the Council of Judges and Prosecutors (Hâkimler ve Savcılar Kurulu or HSK).

• First-instance tax courts – These are generally composed of a single professional judge appointed by HSK. However, where the monetary value of the dispute exceeds the statutory threshold, the case is heard by a panel of three judges. The composition (single judge or panel) is determined automatically based on the value of the dispute at the time of filing.
• Regional administrative courts – All appeals before the regional administrative courts are decided by panels of three judges, regardless of the nature or monetary value of the dispute.
• Council of State – This operates through specialised chambers to which cases are allocated under internal rules. Each chamber decides cases through a panel of five judges, including a presiding judge and a rapporteur. Where there is a conflict between decisions of different chambers, or where a matter of legal significance arises, the case may be referred to the General Assembly of Tax Law Chambers, which decides by majority vote and whose decisions carry binding authority for all lower courts.

Turkish tax law does not provide for general mediation or arbitration as ADR mechanisms in domestic tax disputes. There is no independent mediator, no arbitral tribunal with jurisdiction over tax matters, and no opt-in arbitration clause available under domestic law. Instead, dispute resolution outside the courts operates through a set of statutory administrative procedures such as reconciliation established under the TPL, which function collectively as the ADR framework in Turkish tax practice.

In Türkiye, tax disputes are mainly settled through statutory administrative mechanisms rather than traditional ADR such as mediation or arbitration.

Reconciliation

The main dispute settlement mechanism is reconciliation (uzlaşma), which allows taxpayers to negotiate with the tax administration to settle assessed penalties outside of court proceedings. Reconciliation is available in two forms:

• Pre-assessment reconciliation, which is available after the draft audit report is issued but before the formal assessment is served. This is generally the more favourable route, as it offers a broader scope for negotiation at an earlier stage.
• Post-assessment reconciliation, which is available within 30 days of notification of the assessment and penalty notice.

Following amendments, the tax principal (vergi aslı) is no longer subject to reconciliation. This represents a material narrowing of the reconciliation regime compared to prior law.

Penalty Reduction

Penalty reduction (TPL Article 376) allows disputes to be resolved by accepting the assessment and paying a reduced penalty, providing a “pay and resolve” option without litigation.

Explanation Invitation

The explanation invitation (izaha davet) under Article 370 of the TPL allows the administration to invite taxpayers to clarify discrepancies identified through preliminary risk analysis before a formal audit is initiated; a satisfactory explanation may prevent the matter from escalating further.

Regret and Voluntary Disclosure

The regret and voluntary disclosure mechanism (Article 371 TPL) allows taxpayers to correct undeclared taxes by notifying the administration and paying the tax with interest, thereby avoiding penalties and, in certain cases, criminal sanctions, subject to legal conditions.

Ombudsman

Finally, the Ombudsman institution may review taxpayer complaints after administrative remedies are exhausted and issue non-binding recommendations that may help facilitate resolution in practice.

As noted in 6.1 Mechanisms for Tax-Related ADR in This Jurisdiction, Türkiye does not operate a mediation or arbitration system for domestic tax disputes. Reductions in assessed amounts are achieved through the statutory reconciliation mechanism and the penalty reduction procedure under Article 376 of the TPL.

Scope of Reductions Through Reconciliation

Following the amendments introduced by Law No 7524 in August 2024, reconciliation is available only in respect of penalties — specifically tax loss penalties (vergi ziyaı cezası) and, where they exceed the statutory threshold, irregularity and special irregularity penalties. The tax principal (vergi aslı) was removed from the scope of reconciliation by Law No 7524. Late payment interest (gecikme faizi) has never been within the scope of reconciliation and cannot be reduced through this route.

Penalty Reduction Under Article 376 of the TPL

As a statutory alternative to reconciliation, taxpayers who accept the assessment and pay within the prescribed period may benefit from a fixed penalty reduction under Article 376 of the TPL. Tax loss penalties are reduced by one half, while irregularity and special irregularity penalties are reduced by one third. This mechanism is available only for penalties.

The Advance Ruling System

In Türkiye, taxpayers may request written guidance from the Turkish Revenue Administration under Article 413 of the TPL. The administration may issue a taxpayer-specific ruling (özelge) or a general circular (sirküler). This system is widely used and is an effective tool for managing tax uncertainty and preventing disputes before they arise.

Advance Pricing Agreements

In addition, advance pricing agreements (APAs) provide binding arrangements on transfer pricing methodologies for related-party transactions, including pricing methods and comparables for a defined period, thereby increasing legal certainty and reducing future disputes. However, the application of APAs is not common in Türkiye.

In Türkiye, the main ADR mechanism in tax matters is reconciliation (uzlaşma), which applies to a broad range of tax disputes, although it is generally not available for purely procedural penalties unrelated to a substantive tax assessment. There is no monetary threshold for access, but in practice it is mainly used in cases involving significant penalty exposure.

For post-assessment reconciliation, applications must be submitted within 30 days of notification of the assessment or penalty. The law does not set a fixed deadline for a decision, but in practice the process is usually completed within a few months.

Reconciliation agreements are final and binding, and there is no possibility of appeal once concluded.

The process is conducted by Reconciliation Commissions composed of officials of the Turkish Revenue Administration. There are no independent mediators or arbitrators, and taxpayers do not participate in the appointment process. Decisions are taken collectively within the commission.

As an administrative procedure, reconciliation does not operate based on precedent or equity principles, and no formal rules on ex aequo et bono apply.

Transfer pricing disputes are in principle eligible for reconciliation following notification of the assessment. In practice, however, the technical complexity of these cases, involving methodology, comparables and arm’s length adjustments, often limits the effectiveness of the reconciliation process, and significant disputes are more frequently resolved through litigation.

In cross-border situations, the mutual agreement procedure (MAP) under Türkiye’s tax treaties provides an additional ADR mechanism, allowing competent authorities to negotiate bilaterally to eliminate double taxation. A MAP can be lengthy and complex but enables co-ordinated resolution not available through domestic procedures alone.

Taxpayers may also use advance pricing agreements (APAs) to prevent transfer pricing disputes by agreeing in advance on methodologies, comparables and adjustments for a defined period, providing certainty and reducing future disputes, although the process may be time-consuming.

However, MAPs and APAs are not common in practice.

In cases where tax liabilities are assessed on an ex officio basis – typically where the taxpayer’s records are found to be insufficient, unreliable or absent – reconciliation is available in respect of the associated penalties. The underlying tax principal determined through such indirect methods is not subject to reconciliation.

In Türkiye, additional tax assessments and penalties are legally distinct. An assessment corrects the tax due; the applicable penalty depends on the nature of the underlying conduct.

Where an underpayment arises from an error, misapplication of a rule, or an adjustment under a general or specific anti-avoidance rule (a GAAR or a SAAR), the default consequence is a tax loss penalty equal to the underpaid tax. The application of anti-avoidance rules does not in itself trigger criminal liability – a taxpayer is not automatically subject to criminal proceedings simply because an additional assessment is issued.

Criminal exposure arises only where conduct falls within Article 359 of the TPL, which covers deliberate offences such as the use of false documents, falsification of accounting records and concealment of taxable transactions. In such cases the penalty rises to three times the underpaid tax and a criminal complaint must be filed with the Public Prosecutor.

Administrative and criminal proceedings run concurrently and independently.

In Türkiye, civil tax disputes and administrative or criminal proceedings may run in parallel based on the same underlying facts. Civil proceedings concern the legality and amount of the tax assessment, while administrative or criminal proceedings address possible infringements or intentional misconduct.

These proceedings are legally independent but practically interconnected. The outcome of the civil tax case may influence administrative or criminal proceedings, particularly regarding the existence of tax loss or assessment of intent.

There is no general legal requirement to suspend administrative or criminal proceedings while tax courts determine whether and how much tax is due. However, in practice, authorities or courts may take ongoing proceedings into account and co-ordinate where appropriate.

Administrative infringement proceedings in Türkiye are typically initiated by the tax authorities when non-compliance is identified, most often with a tax audit. This may include errors in tax declarations, late payments, or incorrect deductions, and results in an assessment together with administrative penalties.

Criminal tax proceedings are initiated where there is evidence of intentional tax evasion or fraud, such as deliberate under-reporting of income or falsification of documents. These cases are referred to the prosecutorial authorities once relevant evidence is identified.

An administrative infringement process may evolve into a criminal tax case if evidence of intent or fraud emerges during the audit or subsequent review. However, in practice, most cases remain at the administrative level, and escalation to criminal proceedings is less common, requiring clear indications of intentional misconduct.

The process starts when a potential infringement is identified during a tax audit. The taxpayer is notified and given the opportunity to respond. The administration then issues a tax assessment together with applicable penalties. The taxpayer may challenge this through administrative remedies or by filing a case before the tax courts, which may then proceed through the administrative court system.

Criminal proceedings begin with an investigation by the tax authorities or the public prosecutor when evidence of tax evasion or fraud is identified. If the prosecutor decides to proceed, a criminal case is brought before the competent criminal court. The court hears evidence from both sides and issues a judgment, which may be appealed.

The criminal tax case is heard by a separate criminal court and is not the same court that decides the legality of the related tax assessment, which is handled by the tax courts within the administrative judiciary.

Turkish tax law provides several mechanisms linking timely payment to penalty relief. Where a taxpayer voluntarily discloses and corrects an undeclared position before any audit commences, the tax loss penalty is waived entirely under the voluntary disclosure mechanism, with only the underpaid tax and a surcharge payable. Once an assessment has been issued, the taxpayer may instead opt for a statutory penalty reduction, reducing tax loss penalties by one half and irregularity penalties by one third, by accepting and paying promptly. Where the conduct also carries criminal exposure, payment of the assessed amounts before a formal criminal complaint is filed may in certain circumstances prevent prosecution, making early resolution of the administrative dispute strategically significant.

Under Article 371 of the TPL, a “mechanism of remorse” has been established, allowing taxpayers to avoid penal sanctions only for the offences of tax evasion and causing tax loss. This method, which is applicable to declaration-based taxes, enables taxpayers to avoid paying tax loss penalties. For an application of remorse to be considered valid, taxpayers must voluntarily report their unlawful acts to the competent authorities. However, this is subject to certain conditions in order to prevent a trial. If the criminal case has been initiated, there is no provision regulating the suspension of such proceedings.

Judgments of the criminal court of first instance in tax offence cases may be appealed within the criminal justice system. The first level of appeal is before the Regional Courts of Justice, which review both factual and legal aspects of the case. A further appeal may be lodged before the Court of Cassation, which focuses on legal review and ensures the correct application of law. After the exhaustion of domestic remedies, and in limited circumstances, applications may be made to the Constitutional Court or the European Court of Human Rights where fundamental rights are alleged to have been violated.

In Türkiye, transactions challenged under GAAR, SAAR or transfer pricing rules generally give rise to administrative tax assessments and penalties, rather than criminal tax cases. These rules are applied to correct the tax consequences of transactions and do not, in themselves, imply fraudulent intent.

In Türkiye, double taxation arising from cross-border tax adjustments may be addressed through domestic litigation, treaty-based mechanisms (a MAP), or in some cases both in parallel. In practice, taxpayers may challenge the tax assessment before Turkish courts, but this route remains unilateral and does not involve the foreign tax authority, which may limit its effectiveness in eliminating double taxation.

At the same time, taxpayers may also use the MAP under double tax treaties, which has become the main treaty-based mechanism for resolving cross-border double taxation cases. In certain treaties, arbitration may be available if a MAP does not result in an agreement. In some situations, taxpayers may pursue both domestic litigation and a MAP simultaneously, although this requires careful co-ordination.

From a policy perspective, the system has evolved significantly following Law No 7338 (effective 1 January 2022), which formally incorporated MAP provisions into Turkish tax law and aligned the framework more closely with international BEPS standards.

Regarding international developments, the EU Tax Disputes Directive is not applicable to Türkiye due to its non-EU status, although it may indirectly influence international standards. The MLI has been signed but is not yet fully in force domestically, meaning its dispute resolution and arbitration-related provisions are not currently operational in Türkiye.

In Türkiye, anti-avoidance in cross-border treaty situations is generally achieved through a combination of specific anti-avoidance rules (SAARs) and a long-standing judicial approach based on economic substance, rather than a single codified GAAR. In practice, tax authorities and courts focus on the economic reality of transactions, particularly where arrangements appear to lack genuine commercial substance, and may recharacterise transactions accordingly. This approach has already been applied in case law, including in cross-border and treaty-related disputes.

Although Türkiye has signed the MLI, its provisions are not yet fully operational domestically, so the principal purpose test (PPT) has not yet been applied in practice. However, the expected impact of the PPT and amended treaty preambles is to strengthen the tax administration’s ability to challenge structures lacking economic substance, particularly in holding, financing and intermediary arrangements.

In Türkiye, international transfer pricing adjustments are predominantly challenged through the domestic tax dispute system, with disputes typically proceeding before Turkish tax courts following administrative audit and appeal stages. Domestic litigation therefore remains the main forum for resolving such cases.

Although APAs are available under the Corporate Tax Law in Türkiye, their use as a dispute-avoidance mechanism is still relatively limited. The APA process starts with an optional pre-filing stage, followed by a formal application supported by detailed transfer pricing documentation. The tax administration then conducts a functional and economic analysis, including assessment of comparability, risks, assets, and appropriate pricing methods.

Cross-border litigation in Türkiye is mainly driven by withholding tax (WHT), permanent establishment (PE) controversies, transfer pricing (TP) issues and – increasingly – by disputes related to the digital economy and global minimum tax developments.

Cross-border dispute areas include:

• WHT – disputes arise over taxation of dividends, interest, royalties and service fees, including treaty interpretation and beneficial ownership issues. Cross-border digital service payments have also become a recent focus.
• TP – Increasingly, technical disputes concern whether related-party transactions comply with the arm’s length principle, driven by stricter documentation requirements and more intensive audits.
• PE – Controversies persist over the existence and scope of a permanent establishment, particularly in digital and remote business models, including websites, dependent agent PE and significant economic presence interpretations.
• Residency – Dual residency conflicts and treaty entitlement issues arise for both individuals (including HNWIs) and companies.

Mitigation of such litigation generally depends on improving legal certainty and compliance, particularly through clearer tax rules and administrative guidance in areas such as WHT, PE, TP and digital taxation, as well as maintaining strong documentation practices (including transfer pricing documentation and consistent intercompany agreements) to better defend positions during audits.

This issue is not applicable in Türkiye, which is not an EU member state.

This issue is not applicable in Türkiye, which is not an EU member state.

This issue is not applicable in Türkiye, which is not an EU member state.

This issue is not applicable in Türkiye, which is not an EU member state.

Türkiye has not opted for mandatory binding arbitration under Part VI of the MLI. This position is based on several policy considerations, including a preference for bilateral negotiation mechanisms, the desire to preserve sovereignty over tax dispute resolution, and concerns related to the financial and administrative burden of arbitration. In addition, Türkiye’s existing legal and institutional framework is more closely aligned with negotiated solutions, and its traditional approach continues to rely primarily on domestic procedures and MAP-based settlements, even though MAP usage has increased in practice.

It should be noted that this position remains theoretical at present, as Türkiye signed the MLI in June 2017 but has not yet ratified it.

In line with this approach, arbitration clauses are rare in Türkiye’s double tax treaty network, and the MAP remains the main mechanism for resolving treaty-related disputes.

As noted in 10.1 Application of Part VI of the Multilateral Instrument (MLI) to Covered Tax Agreements (CTAs), Türkiye has not opted into Part VI of the MLI and has not ratified the instrument. Accordingly, mandatory binding arbitration is not available under the MLI framework in Türkiye, and no MLI-based options or reservations regarding the scope of arbitrable matters have been activated.

As Türkiye has neither ratified the MLI nor opted into Part VI, the choice between these two procedural models does not currently arise in practice. No formal public statement has been made by the Turkish Parliament or tax authorities specifically addressing the choice.

As noted in 10.1 Application of Part VI of the Multilateral Instrument (MLI) to Covered Tax Agreements (CTAs), the MLI has no legal effect in Türkiye at present. When and if ratification occurs, Türkiye’s deposited reservations and notifications will determine the MLI’s practical scope – but given Türkiye’s consistent policy of declining mandatory binding arbitration, it is unlikely that Part VI would be adopted at that stage without a significant shift in approach.

As noted in 10.1 Application of Part VI of the Multilateral Instrument (MLI) to Covered Tax Agreements (CTAs), Türkiye has not yet ratified the MLI through Parliament and it therefore has no legal effect in Türkiye. No cases have been initiated or concluded under the MLI framework, as it remains pending ratification.

The MAP is the primary and only operational treaty-based dispute resolution mechanism in Türkiye. The OECD periodically produces extensive statistics and publications on MAP operations, disclosing 16 examples excluding transfer pricing issues, notwithstanding the lack of precise information on MAP cases, in Türkiye.

Türkiye supported the Two-Pillar political agreement in 2021, but Pillar One has not been implemented, as the required multilateral convention remains under negotiation. The Digital Services Tax (DST) remains in force in the interim, with its rate reduced from 7.5% to 5% as of 1 January 2026 and to 2.5% from 1 January 2027. Türkiye has indicated that the DST’s elimination is linked to Pillar One implementation, though no binding legislative commitment exists.

Pillar Two was implemented through Law No 7524 (August 2024), introducing a 15% global minimum top-up tax for multinational groups with consolidated revenues exceeding EUR750 million, effective from 1 January 2024. A domestic minimum corporate tax of 10% was also introduced for all corporate taxpayers. Türkiye’s domestic minimum tax is structured to qualify as a QDMTT safe harbour, which would limit top-up tax claims by other jurisdictions. In practice, however, disputes are expected to increase in the coming years given the complexity of the GloBE rules, interpretive uncertainties, and the interaction of the global minimum tax with Türkiye’s existing incentive regime. Settled administrative practice and international co-ordination will take time to develop.

Tax court decisions in Türkiye are accessible through official legal databases and court registries. In practice, decisions of the Council of State are regularly published and widely referenced, while first-instance tax court decisions have more limited circulation. Published decisions are anonymised to protect taxpayer identity in accordance with data protection rules, though the anonymisation is not always consistent in practice.

Binding private rulings issued by the Turkish Revenue Administration are published in anonymised form on its official database, allowing taxpayers to access prior guidance on similar issues. General circulars are published in full as they are addressed to all taxpayers rather than specific applicants.

MAP outcomes are kept strictly confidential between the competent authorities of the contracting states and the taxpayer concerned. Individual case outcomes are not published.

Türkiye’s bilateral double tax treaties already include equivalent confidentiality obligations in their exchange of information articles; which aligns with the MLI’s confidentiality provisions.

In order of practical importance, the instruments most used to settle tax disputes in Türkiye are domestic administrative procedures, litigation before the tax courts, and MAPs under bilateral double tax treaties. MLI-based and EU-based mechanisms are not currently operational.

Independent professionals (such as accountants, lawyers and tax advisors) are commonly hired by taxpayers in Türkiye both at the initial stage and during the later stages of tax disputes, including administrative objections and tax court litigation. On the state side, tax disputes are primarily handled by government-employed legal and tax specialists.

At the administrative level in Türkiye, filing an objection against a tax assessment is generally free of charge, and no official fee is payable to the tax authorities for submitting the claim. Additional costs may arise from professional assistance, such as fees for tax advisors or legal representatives engaged by the taxpayer, depending on the contractual arrangement.

Depending on the type of action and the level of judicial review, there are a variety of procedural fees and advance costs associated with tax dispute litigation in Türkiye. These costs are often low. These expenses typically result from the filing of a case before the administrative and tax courts, as well as from the appeals and cassation processes that follow before higher courts. Below is a summary of these fees’ current estimated amounts as well as their structure.

Initial Litigation Costs

These comprise:

• postal expense – TRY2,100;
• request for hearing – TRY2,520;
• request for stay of execution – TRY2,940;
• request for both hearing and stay of execution – TRY3,360; and
• interim/appeal-stage postal expense range – TRY1,000–1,500.

Tax Court Filing and Procedural Fees

In addition to postal costs, the following administrative and procedural court fees apply:

• an application fee – TRY732;
• a copy/duplicate document fee – TRY25; and
• an attorney authorisation (power of attorney) fee – TRY104.00.

Appeals and Higher Court Procedures

When disputing decisions through appellate mechanisms, additional fees are charged depending on the type of review:

• appeal application fee – TRY2,121.70;
• cassation application fee – TRY3,189.50;
• cassation stay of execution request fee – TRY1,526.20;
• Council of State application fee (tax disputes) – TRY1,521.20; and
• Council of State stay of execution request fee – TRY1,526.20.

Payment Responsibilities and Timing

These fees and advance expenses are generally paid at the time of filing the lawsuit or submitting an appeal. The initiating party (plaintiff or appellant) is responsible for upfront payment, and the amounts vary depending on the procedural requests included in the application.

End Costs

These comprise:

• TRY732.00 for decisions on the merits in cases not subject to proportional fees or where no adversarial proceedings are established, as well as dismissal decisions;
• TRY1,526.20 for decisions of the Council of State (and other high courts) rejecting appeals or requests for rectification of judgments; and
• TRY1,206.00 for interim decisions such as stay of execution, precautionary measures, or evidentiary determinations.

At the conclusion of the case, court costs may be allocated to the losing party depending on the outcome. If the taxpayer prevails, certain procedural expenses may be recovered or offset against tax liabilities in line with judicial practice, although the system overall maintains relatively moderate financial barriers and costs mainly depend on procedural choices such as appeals and enforcement-related requests.

If the court rules against the tax authority in tax litigation, it must repay any court fees and procedural expenses to the taxpayer. The court may also order the tax authority to reimburse the taxpayer’s legal costs by way of a statutory attorney’s fee (karşı vekâlet ücreti), calculated in accordance with the Turkish Bar Association’s minimum fee tariff for the relevant instance.

In addition, where the taxpayer has paid the assessed tax prior to the court’s decision – whether because of an enforcement action or otherwise – the annulment of the assessment entitles the taxpayer to recover the amount paid together with statutory interest from the date of payment.

Participating in ADR procedures does not require taxpayers to pay fees or expenses. However, there may be extra expenses if taxpayers choose to hire an accountant or attorney to help them through these procedures.

According to the Judicial Statistics 2025 report published in March 2026, in 2025 there were a total of 169,176 cases in tax courts. Of these, 107,373 were concluded, while 61,803 were carried over as pending to the following year. It is also reported that the average caseload per judge in administrative and tax courts was 459 cases. The report does not provide separate data on the monetary value of pending cases.

In 2025, lawsuits filed across various tax categories at the tax courts were as follows:

• collection of public claims – 22,309;
• VAT – 18,358;
• tax procedure (tax penalty) – 16,051;
• income tax – 4,287;
• corporate tax – 5,686;
• stamp tax – 2,330;
• charges – 1,370; and
• applications to the Tax Offices Co-Ordination Settlement Commission – 858.

In 2025, the following lawsuits pertaining to various tax categories were resolved:

• collection of public claims – 23,005;
• VAT – 15,403;
• tax procedure (tax penalty) – 13,301;
• income tax – 3,399;
• corporate tax – 3,989;
• stamp tax – 2,155;
• charges – 1,086; and
• files settled by the Tax Offices Co-Ordination Settlement Commission – 681.

Regarding how often tax authorities or taxpayers prevail in court, there are no public statistics available for Türkiye.

The following are key strategic guidelines to consider in a tax controversy:

• Documentation and evidentiary strength – ensure accounting records, contracts and transaction data are complete and consistent, as Turkish tax disputes rely heavily on documentary evidence and burden of proof rules.
• Audit readiness and risk anticipation – maintain ongoing tax risk assessment, since most disputes originate at the audit stage rather than later assessment phases.
• Use of administrative remedies – make effective use of objection and administrative review mechanisms to resolve issues before litigation.
• Procedural discipline in litigation – strictly comply with filing rules, jurisdiction and statutory deadlines, as procedural validity is critical in tax courts.
• Engagement during audits – maintain structured communication with tax inspectors, balancing cooperation with protection of legal position.
• Burden of proof strategy – anticipate evidentiary shifts, particularly where tax authority assumptions or estimations are challenged.
• Key tax risk areas – address recurring disputes on valuation, deductibility and revenue recognition in line with legislation and case law.
• Cross-border considerations – consider treaty application, PE risks and transfer pricing alignment, which are frequent sources of controversy in Türkiye.