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be taken into account in the arm’s length price analysis. shall be applicable in case of failure to fulfil the terms of the
These can be mainly listed as a decline in sales volumes, APA. Breach of a critical assumption regarding APAs may
comparison of fluctuation of sales during the pandemic cause three potential outcomes: revision, cancellation and
with previous periods, changes in capacity usage compared revocation. The Guideline encourages taxpayer for early
to pre-pandemic period, extraordinary income/expense notification where material changes in economic conditions
as a result of the pandemic that may directly affect the lead to the breach of one or more of the critical assumptions
profitability of related party transactions, government aids as soon as practicable after the change occurs or the
and support received in the pandemic period and their effect taxpayer becomes aware of the change.
on profitability, legal regulations implemented during the
pandemic that directly affect the profitability of related party Conclusion
transactions (e.g. limitation of sales of certain products),
macroeconomic trends specific to industry for which data Since impact of Covid-19 pandemic varies from one
is received from central banks, statistical institutions and enterprise to another, each enterprise is required to examine,
professional chambers and analysis of crises in the past that understand and monitor impact of the pandemic in the
had similar impact on global economy. context of the industry in which it operates and on the basis
of global economy.
The Guideline has also offered three distinct suggestions
towards arm’s length price studies such as price adjustment Our recommendations in this scope are as follows:
mechanisms, evaluation of comparables set and inclusion
of loss-making comparable companies. Price adjustment • To compare impacts of the pandemic on the company with
mechanisms foresee the readjustment of prices determined its impacts on the industry in general,
during the pandemic when the arm’s-length price and
profitability becomes more attainable. Evaluation of • To monitor all extraordinary and/or exceptional costs
comparable data set emphasizes on reviewing determined arising due to pandemic closely,
comparables in the light of most up-to-date macroeconomic • To define changes in business strategies and decisions that
data and being flexible with the search criteria in order to are taken and applied,
reach the most accurate comparables. Finally, it is mentioned
that comparable firms making loss during the pandemic but • To discuss the option not to pay royalties and management
meeting the comparability criteria should not be omitted fees temporarily,
from comparable data set in order to increase accuracy and • To discuss allocation of loss arising in the group level,
reliability of benchmarking studies.
• To maintain compliance to arm’s length principle and not
3. Government assistance programs to disregard it due to the pandemic and at the same time
to consider the effects of the pandemic in comparability
According to the Guideline, economic impacts of government analyses,
assistance programs regarding Covid-19 pandemic such • To determine the amendments made in the agreements
as grants, subsidies, forgivable loans, tax deductions or between related parties due to the pandemic,
investment allowances on accurately defined transactions
are required to be reviewed in transfer pricing analysis. The • To follow institutions, primarily OECD, publishing up-to-
Guideline specifically mentions that government assistance date studies and regulation regarding this matter.
which directly impact the profitability and the price of
related party transaction should be taken into consideration.
The potential impact on pricing is based on the economic Problems regarding remote
characteristics of the transaction, accurate definition of
controlled transaction and the conducted comparability working application in
analysis. Since government assistance and special conditions technology development zones
of the Covid-19 pandemic differ in different markets, arm’s
length price and profitability analysis could be seriously due to Covid-19 outbreak
affected as a result. Characteristics of government
assistance and competition and demand level in related Remote working application has become widespread due to
markets are some of the issues which are required to Covid-19 outbreak risk and especially firms, which are ready
be examined while analysing the impact of government to carry out their work remotely, have not encountered any
assistance on the price of controlled transactions. problems in terms of business continuity.

4. Advance Pricing Agreements On the other hand, in line with the recent developments
experienced due to Outbreak process, several questions
The Guideline states that unless a condition which may have arisen with respect to exemption provisions of remote
lead to the cancellation or revision of the Advance working application introduced for the personnel employed
Pricing Agreement (“APA”) occurs (e.g., breach of critical at Technology Development Zones.
assumptions), existing APAs and their terms should be
maintained and upheld. If a taxpayer believes that the terms In this scope, separate arrangements have been made
of the APA are no longer appropriate, the taxpayer should on the basis of each company have been made regarding
approach the tax administration transparently to discuss such process. Firstly, it has become possible for the
its concerns. Tax Administrations and taxpayers should activities, performed out of the R&D and design centres and
consider the domestic law or procedural provisions which Technology Development Zones, to benefit from related

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