Reminders Regarding the Ultimate Beneficial Owner (UBO) Notification

27.06.2024

Contents

With the General Communiqué on the Tax Procedure Law (Serial No: 529) ("Communiqué"), published in the Official Gazette dated July 13, 2021, and numbered 31540, corporate tax taxpayers and certain other persons are obliged to report the "ultimate beneficial owner" information, and this obligation remains in effect.

In the Communiqué, the ultimate beneficial owner is defined as the natural person or persons who ultimately control or have ultimate influence over legal entities or unincorporated organizations. The Communiqué also regulates the procedures and principles regarding the obligation of corporate tax taxpayers and other persons, who are required to report ultimate beneficial owner information, to notify their ultimate beneficial owners to the Revenue Administration ("RA").

Who is the Ultimate Beneficial Owner?

For Legal Entities;

i. Natural person shareholders who own more than 25% of the legal entity,

ii. In cases where there is suspicion that the natural person shareholder owning more than 25% of the legal entity is not the ultimate beneficial owner or where there is no natural person shareholder owning such a share, the natural person or persons who ultimately control the legal entity,

iii. In situations where the ultimate beneficial owner cannot be identified under the above clauses, the natural person or persons with the highest executive authority (CEO, CFO, general manager, etc.)

are accepted as the ultimate beneficial owners and are subject to notification.

In unincorporated organizations such as joint ventures;

i. The natural person or persons who ultimately control the unincorporated organizations,

ii. In cases where the ultimate beneficial owner cannot be identified under the above clause, the natural person or persons with the highest executive authority within the unincorporated organization

are accepted as the ultimate beneficial owners and are subject to notification.

In trusts and similar entities, founders, trustees, managers, auditors, or beneficiaries, or those who have influence over these entities, are accepted as the ultimate beneficial owners and are subject to notification.

Who Should Make the Notification of Ultimate Beneficial Owner Information?

Notification of ultimate beneficial owner information must be made by:

i. Corporate tax payers,

ii. The person or partner authorized to represent the partnership in collective partnerships,

iii. One of the partners in commandite companies,

iv. The person holding the highest partnership share in general partnerships,

v. Directors, trustees, or representatives of trusts and similar entities established in a foreign country with a management center or resident manager in Turkey.

In addition to the mentioned obligations, banks, institutions authorized to issue bank cards or credit card outside of banks, finance and factoring companies, capital market intermediary institutions and portfolio

management companies, payment institutions and electronic money institutions, investment partnerships, asset management companies, persons engaged in real estate buying and selling for commercial purposes and intermediaries in such transactions, as well as other legal entities and organizations listed in the Communiqué, including their branches, agencies, representatives, commercial agents, and similar affiliated units, must report the ultimate beneficial owner information of transactions conducted by their customers to the RA upon request.

Similarly, the branches, agencies, representatives, commercial agents, and similar affiliated units of the taxpayer whose headquarters are located abroad must also report the ultimate beneficial owner information of transactions conducted by their customers to the RA upon request.

When Should the Notification of Ultimate Beneficial Owner Information Be Made?

Corporate tax payers must include the ultimate beneficial owner information as an attachment to their annual corporate tax return and provisional tax returns. Taxpayers other than corporate tax payers and other persons required to make the notification must submit the ultimate beneficial owner information by the end of August each year, in accordance with the explanations provided on the RA's internet tax office. This must be done by filling out the "notification form regarding the ultimate beneficial owner" electronically through the internet tax office. It is mandatory to submit the notification electronically, and declarations submitted in person to tax offices will not be accepted.

The notification form regarding the ultimate beneficial owner can be submitted directly by the taxpayer or, during the relevant period, through certified public accountants who have an intermediary and responsibility agreement or through sworn-in certified public accountants with income or corporate tax declaration attestation agreements (full attestation agreement).

In the event that a new taxpayer is established or there is a change in the information previously included in the notification, the new taxpayer establishment or information change must be notified within 1 month following the date of their realization.

What is the Penalty for Non-Submission of Ultimate Beneficial Owner Information?

Under the regulations stipulated in the Communiqué, taxpayers who fail to report the required information, or provide incomplete or misleading notifications, will be subject to penalties as per the provisions of Article 213 of the Tax Procedure Law.

Accordingly, those who do not fulfill their duty to provide information or who provide incomplete or misleading information;

— 11.800 TRY for the year 2024 for first class merchants and self-employed persons,

— 5.800 TRY for the year 2024 for second class merchants, farmers who keep books and those whose earnings are determined in simple procedure,

— 3.000 TRY for the year 2024 for those other than those written in the above articles,

special irregularity penalty will be applied.

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