Declaration of Ultimate Beneficial Ownership now Required in Turkey
09 Ekim 2023, 14:17
Declaration of Ultimate Beneficial Ownership now Required in Turkey
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Declaration of Ultimate Beneficial Ownership now Required in Turkey
A new compliance requirement is now imposed on companies doing business in Turkey, calling for annual declaration of the ultimate beneficial ownership (UBO) information to the tax office. In addition, designated institutions and professions covered by the anti-money laundering law (such as banks, payments agencies, finance companies, lawyers, accountants, notaries etc) are also required to report the beneficial owner information of their clients, when and if requested by the Revenue Administration. Tax Procedural Communiqué No.529 published in the Official Gazette on 13 July 2021 sets out the rules for determining who falls under the definition of an UBO and includes explanations on the content and timeframe of the declaration.
Definition of an UBO
The Communiqué provides a definition of beneficial ownership. According to this definition, beneficial owners are individuals who ultimately own or control a legal entity or arrangement such as a company, a trust. The criteria for deciding who should be considered a beneficial owner are as follows:
For legal entities,
- Individuals owning more than 25% of the legal entity
- Individuals who have ultimate control of the legal entity, if the individuals holding more than 25% of the legal entity are suspected of not being the beneficial owner or if there is no individual holding 25% of the legal entity
- Individuals with the highest level of executive power (i.e. the general manager), if the beneficial owner cannot be determined as above.
For entities without legal status,
- Individuals with ultimate control
- Individuals with the highest level of executive power, if the beneficial owner cannot be determined.
For trusts,
- Founders, trustees and those who have the title of directors, auditors or beneficiaries or those who have influence over these institutions.
Who is required to annually report UBO information?
Corporate taxpayers as well as other entities without legal status that have been listed in the Communiqué (i.e. commandite companies, trusts and similar institutions) which are active as of 1 August 2021 (including those in the liquidation process) are required to regularly report the UBO information to the Revenue Administration.
Corporate taxpayers will declare their UBO information in their advance tax returns and annual corporate tax returns. Parties other than corporate taxpayers will declare the UBO information to the Turkish Revenue via electronic forms by the end of August every year. In case of change in the declared information, the changes must be declared within one month. For the first UBO declarations, however, all taxpayers and other parties mentioned in the Communiqué must declare the UBO information via electronic form by the end of August 2021.
Content of the declaration
The Communiqué prescribe a variety of items of information and documents which will be submitted by a taxpayer to the Revenue Administration with respect to each of its UBOs including the following:
- Full name;
- Country of citizenship;
- Identification Card Number;
- Passport;
- Residential address, email and contact phone number;
- Reason for being considered a beneficial owner.
Penalty for non-compliance
Where the taxpayer refuses or fails to provide the Revenue Administration with all required information or provides incorrect information, irregularity penalty may be imposed under Tax Procedural Code.
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