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Turkey Regulates Ultimate Real Beneficiary Notification Requirements — Orbitax Tax News & Alerts

Turkey's Revenue Administration has announced the publication of Tax Procedure Law General Communiqué No. 529 in the Official Gazette, which regulates the determination of ultimate real beneficiaries (beneficial owners) of corporate taxpayers, collective companies, limited partnerships, ordinary partnerships, and trusts, as well as their notification to the Revenue Administration. The requirement to provide notification on ultimate beneficiary information applies for:

  • Corporate taxpayers;
  • The person authorized to represent a company or a partner in collective companies;
  • One of the limited partners in an anonymous limited partnership;
  • The person with the highest shareholding in an ordinary partnership; and
  • The director or trustees of a trust or similar foreign organization whose head office is in Turkey or whose manager is resident in Turkey.

The notification requirements also apply for persons deemed liable for the implementation of the Law on the Prevention of Laundering Crime Proceeds, which includes banks, other institutions issuing credit/debit cards, financing companies, capital market intermediaries, portfolio management companies, insurance/reinsurance companies, and several others. Further, branches, agencies, representatives, and similar in Turkey of foreign companies are required to provide notification if requested by the Revenue Administration.

For the determination of ultimate real beneficiaries, the following rules apply:

  • For legal entities, ultimate real beneficiaries include:
    • natural persons holding more than 25% of the legal entity;
    • the natural person or persons who ultimately control the legal entity, in cases where persons holding more than 25% of the legal entity are suspected of not being the real beneficiaries or no person holds more than 25% of the shares; and
    • natural persons with the highest executive authority, in cases where the real beneficiary cannot be determined according to the above two points;
  • For unincorporated entities, such as unincorporated business partnerships, ultimate real beneficiaries include:
    • the natural person or persons who ultimately control the unincorporated entity; and
    • natural persons with the highest executive authority, in cases where the real beneficiary cannot be determined according to the point;
  • For trusts and similar organizations, ultimate real beneficiaries include those who have the title of founder, trustee, manager, auditor, or beneficiary, or those who have influence over these organizations.

The standard method and deadlines to provide notification on ultimate beneficiary information are as follows:

  • For corporate taxpayers, ultimate real beneficiary information must be provided in the annex of their temporary (advance) tax return and annual corporate tax return;
  • For persons other than corporate taxpayers, ultimate real beneficiary information must be submitted to the Revenue Administration in electronic form by the end of August of each year; and
  • Where a new notification liability is established or there is a change in information, this must be notified within one month.

For the first notification, however, it is provided that all persons, including corporate taxpayers, that are obliged to provide real beneficiary information under the new requirements must electronically submit the first notification on ultimate real beneficiary information to the Revenue Administration by 31 August 2021.