ERDEM-NEWSLETTER-2018-metin

366 NEWSLETTER 2018 Corporate Income Tax Law Pursuant to Article 13 of Corporate Income Tax Law No. 5520 (“Law No. 5520”), the purchase or sale of goods or services of corpo- rations to its related parties at a price or fee that they have determined, and which are in contradiction with the arm’s length principle, the gain is deemed to be distributed in whole or in part through transfer pricing. Purchase, sale, production and construction operations, leas- ing and leasing transactions, borrowing and lending money, and other transactions requiring bonuses, fees and similar payments to be paid are deemed as service rendering and having so obtained. Law No. 5520, in conformity with the regulation under the CML, requires the arm’s length principle to be met. In the event that an interest-free (not comparable to similar transactions) loan is granted, the risk of such a transaction is that it may be deemed as illegal profit distribution through transfer pricing. Conclusion Despite the fact that various regulations forbid interest-free loans, due to the modality of regulation on the crime of usury under the TCL, in practice, companies suspense on whether intragroup loans construe a crime. Therefore, a statement, similar to that which was regulated under the former Decree Law No. 90, such as “Under the provisions of Ar- ticle 195 of the TCC, companies comprised of a group of companies may lend money to each other in accordance with the provisions of the relevant legislation on interest,” is planned to be included in the Law on Financing Companies through Article 63 of Legislative Proposal. Through such expression, the intention is to eliminate the risk of occurrence of the crime of usury, and such intention is explicitly stated under the preambles of the Legislative Proposal.