Turkey Introduces Beneficial Ownership Requirements to Combat Tax Evasion and Ensure Financial Transparency
In a significant move aimed at preventing tax evasion and ensuring financial transparency, Turkey’s Revenue Administration has introduced a requirement for corporate taxpayers and other entities to declare their ultimate beneficial ownership. The new rule, outlined in General Communiqué No. 529 on Tax Procedure Law, came into effect on July 13, 2021, and applies to a wide range of entities.
Who Must Declare Beneficial Ownership?
According to the communiqué, all corporate taxpayers, companies, persons with the highest shareholding in ordinary partnerships, directors, trustees, or representatives of trusts and similar entities having headquarters in Turkey or established in a foreign country with an executive residing in Turkey must declare their ultimate beneficial ownership status. The deadline for initial declarations was set as August 31, 2021, but the communiqué represents the ultimate beneficial ownership declaration as an ongoing obligation.
Definition of Ultimate Beneficial Owner
The communiqué defines the ultimate beneficial owner as a real person who ultimately controls or has the ultimate influence over a legal or non-legal entity. For companies, this includes:
- Individuals holding more than 25% shares
- Those with the highest executive power
- If no one meets these criteria, the company’s shareholders
For non-legal entities such as unincorporated business partnerships, it refers to real persons who ultimately control the entity.
Declaration Requirements
The declaration must include information about the ultimate beneficial owner, including:
- Name and surname
- Citizenship
- Identity number
- Address
- Telephone
- Fax
The declaration should be made via the Internet Tax Office by filling in a special form.
Consequences of Non-Compliance
While information on ultimate beneficial ownership is not accessible to the public, it can be shared with other public institutions and organizations. Those who fail to declare their ultimate beneficial owner or provide incomplete or incorrect information may face sanctions, including penalties ranging from TRY 650.- to TRY 2,500.- for 2021.
Conclusion
In conclusion, we advise entities obliged to declare their ultimate beneficial owners to fulfill their obligations within the specified periods and dates. Additionally, they must maintain their declarations up to date, notifying the Revenue Administration of any changes within one month following the date of occurrence.