Communiqué On Obligations Associated To The Useful Possession Notification Is Printed – Tax

Turkey:

Communiqué On Obligations Related To The Beneficial Ownership Notification Is Published

28 July 2021

Esin Attorney Partnership

To print this article, all you need is to be registered or login on Mondaq.com.

New developments

Tax Procedural Law General Communiqué Serial No. 529
(“Communiqué“), involving the
provisions on notification obligation related to beneficial
ownership, has come into effect by being published in the Official
Gazette dated 13 July 2021.

What does the Communiqué mean?

The Communiqué aims to fight tax fraud effectively by
determining the persons (beneficial owners) who ultimately benefit
from the income or wealth subject to taxation.

According to the Communiqué, the following must notify
the tax authorities of the information on the beneficial owners
based on the procedures and principals stipulated in the
Communique, on the condition that these are active or subject to an
ongoing liquidation process as of 1 August 2021:

corporate tax taxpayers
persons or partners authorized to represent unlimited
companies; one of the partners of a limited partnership of which
the capital is not divided into shares and the shareholder of an
ordinary partnership who holds the higher percentage of shares;
directors, trustees or representatives of the trusts or similar
enterprises, whose headquarters are located in Turkey or those
established abroad that have Turkish resident directors

In addition, those that are listed as liable within the scope of
Law No. 5549 Regarding the Prevention of Laundering of Crime
Revenues together with their branches, agents, representatives and
commercial agents should submit the beneficial ownership
information related to the transactions carried out by their
customers to the Revenue Administration upon request.

Who is the beneficial owner and how is it
determined?

The Communiqué defines the beneficial owner as real
person(s) holding the ultimate control of the legal persons or the
enterprises without any legal personality, or those who ultimately
have influence over them. According to the Communiqué, the
beneficial owner is determined for legal persons, enterprises
without legal personality such as business partnerships and trusts
and similar enterprises as follows:

For legal persons:
- real person shareholders holding over 25% of the shares
  thereof
- in cases of doubt that the real person holding over 25% of the
  shares would not be the beneficial owner or if there is no real
  person holding 25% of the shares, real person(s) holding the
  ultimate control over the legal personality
- if the beneficial owner could not be determined based on the
  above, real person(s) who have the ultimate executive authority on
  the legal personality
For enterprises without legal personality such as business
partnerships:
- person(s) holding the ultimate control over the enterprise
- if the beneficial owner could not be determined based on the
  above, real person(s) who have the ultimate executive authority on
  the enterprise
For the trusts and similar enterprises, founders, trustees,
directors, auditors or those that have beneficiary titles, or those
who have influence over these enterprises.

Notification obligation for the corporate tax taxpayers
and enterprises without legal personality

Corporate tax taxpayers should submit the beneficial owner
information within the annexes of the advance corporate tax returns
and annual corporate tax returns. This notification contains the
beneficial owner’s name, surname, citizenship, citizenship ID
number, address and (if one exists) phone number, fax number and
email address together with the basis for deeming that person the
beneficial owner.

Other taxpayers, who are not corporate tax taxpayers, and other
real persons should submit the notification until the end of August
annually through the Internet Tax Office by way of filing the
“notification form related to the beneficial owner.”

In addition, according to Temporary Article 1 of the
Communiqué, all taxpayers including the corporate tax
taxpayers and other real persons should submit the beneficial owner
information electronically to the Revenue Administration by
31 August 2021 at the latest.

Beneficial ownership notifications should be made
electronically. Notifications that are not made electronically will
be regarded as not having been made.

Taxpayers should keep the information related to the beneficial
ownership notification for five years starting from the year
following the submission of the notification.

Consequences of not complying with the notification
obligation

If the notification obligation related to beneficial ownership
is not complied with, or a deficit or misleading notification is
made, a special irregularity penalty under Tax Procedural Law No.
213 will be applied.

Conclusion

The notification obligation to determine the beneficial owners
of income and wealth aims to increase tax transparency in line with
the OECD’s studies and to fight tax fraud more effectively. It
is essential for those who are obliged to submit the beneficial
ownership notification to comply with the procedures and principles
set forth in the Communiqué in order to avoid facing any
fines or penalties.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.