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A. INTRODUCTION
In order to prevent tax evasion, combat money laundering and enhance financial transparency, the identification of ultimate beneficial owners and the reporting of their information to the relevant authorities have become increasingly important. Against this background, the Ministry of Treasury and Finance issued General Communiqué No. 529 on the Tax Procedure Law (the "Communiqué"), which was published in the Official Gazette on 13 July 2021 and entered into force on the same date.
The Communiqué introduced an obligation for certain persons and entities, particularly corporate income taxpayers, to report information concerning their ultimate beneficial owners ("UBOs") to the Turkish Revenue Administration ("TRA"). The purpose of this framework is to identify the natural persons who ultimately own or exercise ultimate control over legal entities or arrangements without legal personality.
The UBO reporting requirement is not a one-off obligation. Rather, it is an ongoing compliance requirement that must be fulfilled at the intervals and upon the occurrence of the circumstances specified under the Communiqué. Accordingly, corporate income taxpayers are required to submit their UBO information to the TRA in accordance with the reporting procedures prescribed under the applicable tax legislation.
B. ULTIMATE BENEFICIAL OWNER REPORTING OBLIGATION
- Identification of the Ultimate Beneficial Owner of Companies
Under the Communiqué, all corporate income taxpayers, and therefore companies falling within this scope, are required to report their UBO information.
For companies, the determination of the UBO primarily relies on the company's shareholding and ownership structure. Accordingly, natural persons who directly or indirectly hold more than 25% of the company's shares are considered UBOs. However, where there is doubt as to whether a natural person holding more than 25% of the shares is in fact the UBO, or where no natural person holds more than 25% of the company's shares, the natural person or persons who ultimately exercise control over the company must be identified as the UBOs. In particular, in the case of group companies, it may be necessary to look beyond the company's immediate shareholding structure and trace the ownership chain to determine which natural person or persons ultimately exercise control. In this respect, the natural person shareholders of a holding company or ultimate parent company may also need to be taken into consideration.
If the UBO cannot be identified on the basis of either share ownership or ultimate control, the natural person or persons holding the highest level of executive authority within the company are deemed to be the UBOs.
Therefore, the determination of the UBO is not limited to formal or registered share ownership. The underlying objective is to identify the natural person who ultimately owns, controls or exercises decisive influence over the relevant legal entity.
- Information Required to Be Included in the UBO Notification
In the beneficial ownership notification, certain personal and contact information relating to the individual identified as the beneficial owner must be submitted to the Revenue Administration.
In this respect, the notification includes information such as the UBO's name, surname, nationality, identification number, address, telephone number, fax number and e-mail address. Where applicable, an explanation as to the grounds on which the relevant person has been identified as the UBO must also be provided.
Accordingly, the reporting obligation is not limited to merely identifying the UBO. It also requires the submission of sufficient information to enable the TRA to identify the relevant individual and assess the basis on which such person qualifies as the UBO.
- Procedure for Filing the Notification
UBO notifications must be submitted electronically. The notification is made by completing the "Ultimate Beneficial Owner Notification Form" through the electronic systems of the TRA.
Accordingly, notification forms submitted physically, whether by hand or by post, are not considered valid filings.
The notification may be filed directly by the taxpayer or through authorised professional advisers in accordance with the applicable legislation. In this context, filings may also be made electronically through certified public accountants or sworn-in certified public accountants who have entered into the relevant certification, intermediation or full-certification agreements with the taxpayer.
This electronic filing system enables UBO information to be maintained within a centralised database and, where necessary, cross-checked against other financial and administrative information available to the authorities.
- Disclosure and Verification of UBO Information
UBO information reported to the TRA is, as a general rule, not publicly accessible, due to the applicable tax confidentiality provisions. Nevertheless, such information may be shared with other public authorities and institutions to the extent permitted under the relevant legislation.
Although the UBO registry is not open to the public, a mechanism has been introduced to enable verification of the information reported to the TRA. Taxpayers may obtain, through the Digital Tax Office, a QR-coded document showing the UBO information they have reported to the TRA.
Persons and institutions classified as obliged entities under Article 2/1-d of Law No. 5549 on the Prevention of Laundering Proceeds of Crime may request this document from their customers and verify it by using the QR code displayed on the document.
This mechanism is particularly relevant for compliance with customer due diligence and beneficial ownership identification requirements. Obliged entities may compare the UBO information identified through their own customer due diligence procedures with the information declared by the customer to the TRA.
Where there is a discrepancy between these two sets of information, the customer's beneficial ownership structure may need to be reassessed. Depending on the nature of the discrepancy and whether it gives rise to suspicion within the meaning of the applicable anti-money laundering legislation, a suspicious transaction report may also need to be submitted pursuant to Law No. 5549 and the relevant secondary legislation.
C. CONCLUSION
General Communiqué No. 529 on the Tax Procedure Law introduced a comprehensive framework for the identification and reporting of UBO information to the TRA. Corporate income taxpayers, including companies, fall within the scope of this reporting obligation.
For companies, UBO identification is primarily based on share ownership exceeding 25%. Where this criterion does not lead to the identification of the UBO, the natural persons who ultimately exercise control over the company must be considered. If the UBO cannot be identified through either ownership or control, the natural person or persons holding the highest level of executive authority are deemed to be the UBOs.
UBO information must be reported electronically to the TRA, and physical filings are not accepted. Although the information submitted is not publicly available due to tax confidentiality rules, it may be shared with public authorities and institutions where permitted by law.
In addition, the QR-coded UBO document obtainable through the Digital Tax Office enables obliged entities under Law No. 5549 to compare the beneficial ownership information obtained from their customers with the information reported to the TRA.
In conclusion, the UBO reporting regime aims to look beyond the apparent or formal ownership structure of companies and identify the natural persons who ultimately own, control or derive the ultimate economic benefit from such entities. In this respect, the regime constitutes an important component of Türkiye's broader framework for tax transparency, anti-money laundering compliance and the prevention of financial crime.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
