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

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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.