Turkey Unveils Strict Beneficial Ownership Requirements to Combat Tax Fraud and Terrorism

In a bid to tackle tax evasion and terrorism financing, Turkey’s Ministry of Treasury has introduced a new Communique with Serial No. 529, effective July 20, 2021.

Background

The move is aimed at identifying the ultimate beneficiaries of Turkish capital companies, who ultimately profit from their income or wealth.

Key Requirements

As of August 1, 2021, all corporations operating in Turkey are required to notify the tax authorities if they are still active or undergoing liquidation. Additionally:

• Companies must submit electronic information on their beneficial owners to the Revenue Administration by August 31, 2021 at the latest.
• Any notifications not submitted electronically will be disregarded and penalties will apply.

Penalties for Non-Compliance

Under Tax Procedural Law No. 213, a fine ranging from TL 2,500 to TL 7,500 will be imposed on companies that:

• Fail to comply with beneficial ownership reporting
• Submit misleading information
• Omit essential details

Significance

This stringent measure is a significant step in Turkey’s efforts to strengthen its regulatory framework and enhance transparency in corporate ownership structures. With the new Communique in place, authorities can now better monitor and track the flow of funds, ultimately preventing tax fraud and terrorism financing.

Benefits

• Improved transparency in corporate ownership structures
• Enhanced ability for authorities to monitor and track fund flows
• Strengthened regulatory framework to prevent tax evasion and terrorism financing