The Turkish Tax Procedural Law General Communiqué serial numbered 529 (“the Communiqué”) concerning the notification obligation of the information related to the actual/real beneficiary (in Turkish, “gerçek faydalanıcı bilgisi”) to the tax authority, has come into effect by being published in the Official Gazette on 13 July 2021.

In terms of combatting the tax evasion, knowing the real beneficiary behind the incomes/wealth is of great importance. The Organization for Economic Co- Cooperation and Development (OECD), of which Turkey is also a member, is working towards this aim of combating tax evasion. In this context, the Global Forum is the leading international body working on the implementation of global transparency and exchange of information standards around the world. It has established international minimum standards that countries must comply with on transparency and information exchange, with that being said knowing the real beneficiary of legal entities and unincorporated entities is one of the main elements of these standards.

This issue also finds its roots in the recommendations set by the Financial Action Task Force for the prevention of money laundering and terrorist financing.

Within this framework, the Communiqué aims to combat against tax evasion through ascertaining the persons (real beneficial owners who ultimately benefit from the wealth and income which is subject to taxation). In accordance with the Communiqué, it has become obligatory to declare the “real beneficiary” for legal entities and other organizations.

Therefore, according to the Communiqué, the Turkish corporate taxpayers must notify the tax authorities of the information on the actual/real beneficial owners based on the procedures and principals stipulated in the Communiqué.

The term “real beneficiary” refers to the individuals who ultimately control or have ultimate influence over legal entities or other organizations.

According to the Communiqué, the following must notify the tax authorities of the information on the beneficial owners, on the condition that these are active (including the ones subject to liquidation procedure) as of 1 August 2021:

In addition, those that are listed as liable within the scope of Law numbered 5549 Regarding the Prevention of Laundering of Crime Revenues (in Turkish, “Suç Gelirlerinin Aklanmasının Önlenmesi Hakkında Kanun”), such as banks, financing, factoring, leasing companies, insurance, reinsurance and private pension companies and their brokers, notaries, sport clubs etc., 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.

For legal persons, the following persons shall be considered as the beneficial owners of the Company:

a. real person shareholders of the Company holding over 25% of the shares thereof

b. 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 person;

c. if the beneficial owner could not be determined based on the above, real person(s) who have the ultimate executive authority on the legal person.

Corporate taxpayers, who are obliged to report, will submit their real beneficiary information in the annex of their temporary corporate income tax declaration (in Turkish, “geçici vergi beyannameleri”) and annual corporate income tax declaration (in Turkish, “yıllık kurumlar  vergisi beyannamesi”).

The real beneficiary’s name, surname, citizenship, identity numbers and addresses, telephone, fax and e-mail information, if any, as well as the reason of being the beneficial owner shall be specified in the notifications.

Beneficial ownership notifications should be made electronically, paper form will be regarded as not having been made. Taxpayers and other persons included in the scope are required to obtain a user code and a password from the tax office they are affiliated with in order to make the notification.

The information related to the real beneficiary notification must be kept by the taxpayers for 5 (five) years starting from the beginning of the year following the date of notification.

If the notification obligation related to beneficial ownership is not complied with, or a deficit or misleading notification is made, a special irregularity penalty provisions under Tax Procedural Law numbered 213 will be applied.

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

Our Law Firm remains at your disposal for any further clarifications you may need.