Financial Crime World

Turkey Introduces Beneficial Ownership Requirements for Corporations and Other Entities

In an effort to increase transparency and combat money laundering and terrorist financing, Turkey’s Ministry of Treasury and Finance has introduced new beneficial ownership requirements for corporations and other entities operating in the country.

Effective Date and Applicability

General Communiqué No.529 on Tax Procedural Law, effective from July 13, 2021, sets out the rules and regulations for declaring the ultimate beneficial owner (UBO) of legal entities and entities without legal status.

Taxpayers Required to Declare UBO Information

The following taxpayers are now required to declare UBO information:

  • Corporation taxpayers
  • Commandite companies
  • Trusts
  • Similar institutions with headquarters or management centers in Turkey
  • Certain parties such as:
    • Banks
    • Payment agencies
    • Financing and factoring companies
    • Financial leasing companies
    • Asset management companies
    • Notary publics
    • Lawyers
    • Sworn-in Financial Advisors
    • CPAs

Definition of Ultimate Beneficial Owner

The UBO is defined as an individual who has ultimate control or influence over a legal entity or entity without legal status. For legal entities, this includes:

  • Individuals with shares exceeding 25% of the entity
  • Those suspected of not being the UBO if no individual shareholder holds more than 25%
  • Individuals with ultimate control

For entities without legal status such as business partnerships, it includes individuals with:

  • Ultimate control
  • Highest level of executive power

Declaration Requirements

Corporation taxpayers must declare UBO information in their:

  • Advance tax returns
  • Annual corporation tax returns

Other parties must declare UBO information via electronic forms by the end of August every year. Changes to previously reported information must be declared within one month of occurrence.

Penalties for Non-Compliance

The communiqué sets out penalties for non-compliance, including:

  • Failure to report
  • Incomplete declarations

All UBO documents and records must be kept for five years by parties subject to the requirements.

First-Time Declaration Deadline

Taxpayers have until the end of August 2021 to declare their UBO information for the first time.

Additional Information

For additional information on this development, please contact Kuzey Yeminli Mali Müsavirlik A.Š., Istanbul, or visit our website for a full listing of contacts and email addresses.