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:

1. Shareholders holding shares exceeding 25% of the legal entity,
2. 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,
3. 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.