Financial Crime World

Turkey Introduces Beneficial Ownership Disclosure Rules for Companies and Professions

New Compliance Requirements for Turkish Companies and Professionals

The Turkish government has introduced new compliance requirements for companies operating in the country, including annual declarations of ultimate beneficial ownership (UBO) information to the tax office. The rules also apply to designated institutions and professions covered by anti-money laundering law.

Tax Procedural Communiqué No. 529: Definitions and Guidelines

The Tax Procedural Communiqué No. 529, published on July 13, sets out the definitions and guidelines for determining UBOs, including individuals with control or ownership of more than 25% of a company.

Who Must Submit Declarations?

  • Corporate taxpayers must declare their UBO information in advance tax returns and annual corporate tax returns.
  • Other entities will submit declarations via electronic forms by August 31.

Designated Institutions and Professions: Reporting Obligations

Financial institutions and designated non-financial businesses and professions (DNFBs) covered by anti-money laundering law are required to report beneficial owner information of their clients when requested by the Revenue Administration. This includes:

  • Financial Institutions

    • Banks
    • Payment service companies
    • Financing and factoring companies
    • Insurance companies
    • Private pension companies
    • Brokers
    • Portfolio/asset management companies

  • Designated Non-Financial Businesses and Professions (DNFBs)

    • Accountants
    • Independent audit institutions authorized to conduct audit in financial markets
    • Real estate agents
    • Notaries
    • Lawyers
    • General directorate of post and cargo companies
    • Directorate general of Turkish mint
    • Precious metals exchange intermediaries
    • Dealers of any kind of sea, air and land transportation vehicles including construction machines
    • Dealers and auctioneers of historical artifacts, antiques and works of art

Declaration Requirements and Timelines

The declaration must include various items of information and documents, such as full name, identification card number, passport, residential address, email, and contact phone number. All taxpayers and other parties listed in the communiqué must submit their UBO declarations via electronic form by August 31, 2021. Changes to declared information must be submitted within one month of the change.

Enhancing Transparency and Preventing Tax Evasion

The new rules are designed to enhance transparency and prevent tax evasion and financial crimes, as required by the OECD-hosted Global Forum on Transparency and Exchange of Information for Tax Purposes. Failure to comply with the new rules may result in irregularity penalties under the Tax Procedural Code.