Beneficial Ownership Requirements Come into Effect in Turkey
A new communiqué aimed at fighting tax fraud has come into effect in Turkey, requiring certain individuals and entities to notify the tax authorities of their beneficial owners. The Communiqué, published on July 13, 2021, aims to determine the real persons who ultimately benefit from income or wealth subject to taxation.
Who Must Notify the Tax Authorities?
The communiqué requires:
- Corporate tax taxpayers
- Unlimited company partners authorized to represent them
- Limited partnership partners with an undivided capital
- Ordinary partnership shareholders holding more than 25% of shares
- Directors, trustees, or representatives of trusts or similar entities with headquarters in Turkey or abroad with Turkish-resident directors
What is a Beneficial Owner?
A beneficial owner is defined as:
- A real person holding ultimate control over a legal entity or enterprise without legal personality
- Those who ultimately have influence over them
Determination of a beneficial owner involves identifying real persons holding more than 25% of shares, those with ultimate control, or those with executive authority.
Notification Requirements
Corporate tax taxpayers and entities without legal personality must submit their beneficial ownership information within the annexes of advance corporate tax returns and annual corporate tax returns. Other taxpayers must submit this information electronically through the Internet Tax Office by August annually. All taxpayers must also submit electronic notifications to the Revenue Administration by August 31, 2021.
Consequences of Non-Compliance
Failure to comply with the notification obligation or submitting a deficit or misleading notification will result in a special irregularity penalty under Tax Procedural Law No. 213.
Purpose of the Notification Requirement
The notification requirement aims to increase tax transparency and combat tax fraud more effectively, in line with OECD studies. It is essential for those obligated to submit beneficial ownership notifications to comply with the procedures and principles set forth in the communiqué to avoid fines or penalties.