Obligation of Ultimate Beneficial Owner Declaration for Corporate Taxpayers and Certain Persons
Through the promulgation of General Communiqué on Tax Procedural Law (“TPL”) No. 529 (“Communiqué”), published in the Official Gazette dated 13 July 2021 and No. 31540, corporate taxpayers and some persons, legal entities and non-legal entities are obliged to notify the ultimate beneficial owner (“UBO”) information.
Detailed information regarding the UBO declaration brought by the Communiqué is given below.
Persons Obliged to Notify UBO Information
The following taxpayers, who are active (including those whose liquidation process continues) as of 1/8/2021, when the notification period begins, must submit the UBO declaration:
- Corporate taxpayers
- The person authorized to represent the company or shareholder in the collective companies, one of the limited shareholders in the anonymous limited partnerships and the person with the highest shareholding on behalf of the ordinary partnerships, the directors, trustees or representatives of the trust and similar organizations established in a foreign country whose head office is in Turkey or whose manager is a resident in Turkey.
In addition, when requested by the Revenue Administration (“RA”), many institutions, especially banks and financial institutions, and their branches, agencies, representatives, commercial proxies, and similar affiliates are obliged to inform the RA of UBO information of the transactions carried out by their customers.
Finally, branches, agencies, representatives, commercial proxies and similar affiliates of the taxpayer whose head office is outside Turkey are obliged to notify the RA regarding the UBO when requested by the RA.
Determination of the UBO
For legal entities, the following are subjected to declaration as the UBO:
- Shareholders holding shares exceeding 25% of the legal entity,
- In the event it is suspected that the real person shareholder holding shares that exceed 25% of the legal entity is not the UBO or there is no real person shareholder holding such a share, the real person or persons who ultimately holds the control of the legal entity,
- In cases where the UBO is not detected within the scope of paragraphs (a) and (b), the real person or persons who holds the senior execution authority.
Additionally, the situation should be examined separately for organizations such as joint ventures who do not encompass legal personality, trust and other similar organizations established under Article 12/2 of Regulation on Measures Regarding Prevention of Laundering Proceeds of Crime and Financing of Terrorism.
The Notification Period and Due Date of Notification
The UBO information is required to be reported as stated below:
- Corporate taxpayers subject to notification should make the notification in the annexes of the provisional tax returns and corporate tax returns.
- Taxpayers other than the corporate taxpayers and the other persons should make the notification to the RA electronically through a form.
In case the above establishes a new tax obligation or there is a change in the information previously added to the notification, the establishment of the new tax obligation or change in information must be notified within one month following the date of their occurrence.
Method of the Notification
Corporate taxpayers, in the annexes of their annual and provisional tax returns, and taxpayers other than corporate taxpayers and other persons who are required to notify, shall make a notification electronically by filling out the "notification form regarding the ultimate beneficial owner" via the Internet Tax Office in accordance with the explanations in the Internet Tax Office.
Corporate taxpayers, who are obliged to notify, through the aforementioned returns; make a notification regarding the UBO’s name, surname, citizenship, identity numbers and addresses, telephone, fax and e-mail information, if any, and the reason for the ultimate benefit.
Those who are obliged to give notification with the notification form, make a notification regarding the ultimate beneficial owner’s name, surname, citizenship, identity numbers and addresses, telephone, fax and e-mail information, if any, and the reason for the ultimate benefit.
Taxpayers and other persons within this scope shall receive their user codes, and passwords from the tax office. Hard copy (delivery by hand or via e-mail) notification forms are not accepted. In order for the notification form to be deemed to have been submitted electronically, the confirmation process should be carried out on the system. The confirmation process must be completed by 23:59 on the last day of the notification period at the latest.
Tax offices/revenue departments shall not accept hard copy notifications since it is mandatory to make notification electronically. Any notification not sent electronically will be deemed not made.
“The notification form regarding the ultimate beneficial owner” may be sent by the taxpayer personally within the relevant period, it can also be sent through an independent public accountant who has an agreement for intermediation and liability or a certified public accountant who has a certification agreement for income or corporate tax return (full certification agreement).
In case it is understood that the notification is inaccurate or incomplete following the notification is made, the notification must be corrected by resubmitting it in accordance with the procedures specified.
Period and Method of the First Notification
All taxpayers including corporate taxpayers, and other individuals who are obliged to make notification regarding the UBO shall submit the UBO declaration electronically until the end of 31/8/2021 at the latest with the form established under Article 6/2 of the Communiqué to the RA.
As a result, the first notification of all taxpayers including corporate taxpayers, and other individuals are going to be submitted by filling the “notification form regarding the ultimate beneficial owner” electronically via the Internet Tax Office in accordance with the explanations by the Internet Tax Office until the end of 31 August 2021 at the latest.
Penalty Sanctions and Other Issues
The information regarding the UBO notification must be kept by the taxpayers for 5 years starting from the beginning of the next calendar year following the date of the notification.
The relevant penalty clauses of the TPL shall be applied to the taxpayers who do not submit the information that is required to be reported, or who make incomplete or misleading notifications.
In case it is determined that there are incomplete records regarding the information on UBO of taxpayers and other individuals who are obliged to notify, as a result of the research, examination and international information exchange to be carried out by the Financial Crimes Investigation Board, and the investigations and examinations to be carried out by those authorized to tax inspection, the RA is informed so that the necessary criminal proceedings can be conducted and necessary changes can be made in its records.
The Communiqué enters into force on the date of publication.
You may find the full text of the Communiqué here.
All rights of this article are reserved. This article may not be used, reproduced, copied, published, distributed, or otherwise disseminated without quotation or Erdem & Erdem Law Firm's written consent. Any content created without citing the resource or Erdem & Erdem Law Firm’s written consent is regularly tracked, and legal action will be taken in case of violation.
Through Law No. 7417 on the Amendment to the Civil Servants Law, Certain Laws and Decree No. 375 ("Law No. 7417") published in the Official Gazette dated 5th July 2022 and No. 31887, a significant amendment is introduced for the application of interest rate deduction resulting from cash capital increase...
Through the Law No. 7417 on the Amendment to the Civil Servants Law, Certain Laws and Decree No. 375 ("Law No. 7417") which is published in the Official Gazette dated 5th July 2022 and No. 31887, significant amendments within Law No. 6183 on the Procedure for the Collection of Public Receivables...
Through the promulgation of the Law No. 7417 on the Amendment to the Civil Servants Law, Certain Laws and Decree No. 375 ("Law No. 7417") which is published in the Official Gazette dated 5th July 2022 and no. 31887, new Wealth Amnesty has been introduced.
Through the promulgation of the Regulation on Amendment to Regulation on the Procedures and Principles to be Applied in Tax Inspections published in the Official Gazette dated 28th June 2022 and no. 31880, significant amendments were made to the rules applied in tax inspections...
Through the promulgation of the President Decision No. 5752 published in the Official Gazette dated 28th June 2022 and no. 31880 (“Decision”), the period of the application of the low withholding rates on the interest obtained from Turkish Lira...
Through the promulgation of Law No. 7407 Amending the Banking Law, Some Laws and the Decree Law No. 655 (“Law No. 7407”), published in the Official Gazette dated 28th May 2022 and No. 31849, corporate tax exemption envisaged for incomes gained through currency protected TRY deposit accounts...
Through the promulgation of Law No. 7394 on the Amendments of Treasury-Owned Immovable Property Valuation and the Value Added Tax Law and on the Amendments of Certain Other Laws and Decrees (“Law No. 7394”), published in the Official Gazette...
Through the promulgation of Law No. 7352 Amending Tax Procedure Law and the Corporate Tax Law (“Law No. 7352”), published in the Official Gazette dated 29th January 2022...
Through the announcement of Circular No. VUK-138/2022-1 and dated 25 January 2022 (“Circular”) made by the Turkish Revenue Administration, it has been announced that the deadline for the submission of tax returns regarding...
Special Consumption Tax Rates and Base for Some Passenger Cars are Amended
VAT Rate Applicable to Education Services Provided in Private Schools and Universities is Reduced to 1%
Procedures and Principles Regarding the Tax Registration Cancellation of Taxpayers with High Risk to Forge Documents is Published
The New Wealth Amnesty entered into force through the Promulgation of the Law No. 7256
Provisions on Restructuring of Public Receivables of the Law No. 7256 entered into force
New Taxation Rules were introduced for Share Buybacks
Procedures and Principles regarding the Restructuring of Some Public Receivables were determined through the General Communiqué Serial No.1
Procedures and Principles regarding the Wealth Amnesty were determined
The Revaluation Rate was determined as 9,11 % for 2020
The Liability for Valuable House Tax will be effective as of 2021
Extension of the Period Designated for Submission of the First Country by Country Report
The Duration of VAT Rate Discounts on Certain Goods and Services is Extended
The Upper Limit of Stamp Tax to be Applied in 2021 was determined
Income Tax Tariffs Applicable on Remunerations and Income Other than Remunerations Acquired in 2021 were determined
The Communiqué on the Procedures and Principles Regarding Valuable House Tax was published
Special Communication Tax Rate was increased to 10%
VAT in Urban Transformation was reduced to 1%
SCT Rates on Electric Cars were increased
Tax Regulations Regarding Technopolis and R&D Centers
Withholding Rate of Long-term Construction and Repair Business was increased
Limitation on Financing Expense Deduction is Back
Special Communication Tax as Deductible Expense
Declaration of Wage Incomes for FY2020
Amendments to Regulation on the Conciliation Before Assessment
Corporate Tax Rate has been increased
The Period of VAT Reduction on Overnight Services in Accommodation Facilities Has Been Extended for 1 Month
SCT Amounts Imposed on Some Fuel Products Have Been Increased
The Corporate Tax General Communiqué No. 18 is Published
The Duration of VAT Rate Discounts on Certain Goods and Services is Extended Until July 31st
The Period of VAT Reduction on Accommodation Services has been re-extended
Time Extension for Wealth Amnesty
The Duration of VAT Rate Discounts on Certain Goods and Services is Extended Until 30 September 2021
The Period of Withholding Rate Reductions on Real Estate Rentals is Extended to September 30th
The Rate Regarding the Working Time Spent Outside the Region and Centers by Personnel Working in Technology Development Zones and R&D or Design Centers Has Been Amended
The Law No. 7338 on the Amendment of Tax Procedural Law and Certain Other Laws Has Entered Into Force
Tax Amendments Introduced Through the Law No. 7341