Ultimate Beneficial Owner Declaration

Turkey is a member of OECD Global Forum on Transparency and Exchange of Information for Tax Purposes. In accordance with the international minimum standards determined by the Global Forum, General Communiqué No.529 on Tax Procedural Law (the Communiqué) was published in the Official Gazette by Ministry of Treasury and Finance of Turkey on 13 July 2021 which imposes a new compliance requirement for legal entities operating in Turkey.

The Communiqué sets out the requirement for an annual declaration of ultimate beneficial ownership to be submitted to the tax office as well as form and timeframe of such declaration.

Definition of the Ultimate Beneficial Ownership

The Ultimate Beneficial Ownership is defined as natural person(s) who ultimately control or have ultimate power over legal entities or entities not having legal identity.

According to Article 5 of the Communiqué, the ultimate beneficial owner shall be determined as follows:

For legal entities:

- Individuals holding shares exceeding 25% of the legal entity

- In case the individual shareholders holding more than 25% of the legal entity are suspected of not being the ultimate beneficial owner or there is no individual shareholder holding such shares, the individual(s) who have ultimate control of the legal entity

- In cases where the ultimate beneficial owner cannot be determined according to criteria above, individual/s with the highest level of executive authority.

For entities not having legal identity, such as business partnerships:

- Individual(s) who have ultimate control over such organizations,

- In cases where ultimate beneficial owner cannot be determined, the individual(s) having the highest level of executive authority.

For trusts and similar institutions:

- Founders, trustees, managers, auditors or beneficiaries or those who have influence over these organizations.

According to new regulation, corporation taxpayers and other types of companies (commandite companies, trusts and similar institutions established in a foreign country that have their headquarters in Turkey with resident managers in Turkey, or with management centers in Turkey) are required to submit declaration of ultimate beneficial ownership information as of 1 August 2021.

For further information please contact nilufer.budak@budaklegal.com

Bibliography

1) https://www.resmigazete.gov.tr/eskiler/2021/07/20210713-4.htm