Turkey Introduces New Compliance Requirement for Beneficial Ownership Disclosure

A New Era of Transparency: Understanding the New Requirement

A recent development in Turkish taxation has introduced a new compliance requirement for companies operating in Turkey. Effective July 13, 2021, companies are now mandated to declare ultimate beneficial ownership (UBO) information to the tax office.

What is Ultimate Beneficial Ownership (UBO)?

According to the Tax Procedural Communiqué No.529, UBO refers to any individual or entity that exercises control over a company through direct or indirect ownership of more than 25% of its shares.

Who Needs to Comply?

The communiqué applies to all companies registered with the Turkish Trade Registry, regardless of their size or industry. This includes:

Companies operating in various sectors
Domestic and foreign companies
Small, medium-sized, and large enterprises

What Information is Required?

To comply with the new requirement, companies must submit a UBO declaration to the tax office within one month from the date of publication. The declaration must include:

Name and surname of the UBO
Place of residence
Nationality
Identity number or passport details
A detailed explanation of their ownership structure, including:
- Names and percentages of ownership of all shareholders

Consequences of Non-Compliance

Failure to comply with the new requirement may result in penalties and fines. It is essential for businesses operating in Turkey to familiarize themselves with the new regulations and submit their UBO declarations on time.

By introducing this new requirement, the Turkish government aims to enhance transparency and combat tax evasion by ensuring that the true beneficial owners of companies operating in Turkey are known to the authorities.