Beneficial owner disclosure

Dear Fortune readers, I would like to share with you my views on the "beneficial owner" disclosure in this article.

In parallel with the standards laid by the OECD’s Financial Action Task Force on Money Laundering (FATF), some regulations are introduced in our country in an attempt to contribute to the ongoing struggle against money laundering.

One of these regulations is related to disclosing the "Beneficial Owner" information. To that end, the General Communiqué No. 529 on Tax Procedure Law stipulates as a requirement the provision of information on the person authorized to represent the company or the partner in corporate taxpayers and general partnership companies, one of the active partners in partnerships not limited by shares, the person holding the highest amount of shares in ordinary partnerships, and the executives, trustees or representatives of trusts and similar entities which are established abroad but have their headquarters in Turkey or have an executive residing in Turkey.

The Communiqué defines Beneficial Owner as “the natural person or the person who ultimately controls or has ultimate influence over a legal entity or unincorporated entities”. In determining the beneficial owner in legal entities, if it is suspected that the real person partners holding more than 25% of shares in the legal entity or the real person partner holding more than 25% of shares in the legal entity is not the beneficial owner or if there is no real person partner holding such an amount of shares, the real person or persons who ultimately control the legal entity shall be considered as the beneficial owner and be subject to disclosure. In cases where the beneficial owner cannot be identified, the information of the real person or persons with the highest level of executive power shall be disclosed. In organizations such as unincorporated business partnerships, the real person or persons who ultimately control the unincorporated entity or, if the beneficial owner cannot be identified, the real person or persons with the highest level of executive power at the unincorporated entity shall be considered as beneficial owner in their capacity as the senior executive and shall thus be subject to disclosure. If there is a change in the beneficial owner information, the said change shall be notified within one month following the date of the change.

 In addition, it is obligatory for the persons and institutions deemed liable for the implementation of the Law on the Prevention of Laundering of Proceeds of Crime such as banks, factoring companies, insurance companies, sports clubs and notaries, as listed, to report, upon request, the beneficial owner information regarding the transactions carried out by their customers.

The first disclosures were made in August. From now on, corporate taxpayers are required to make the aforementioned disclosure as an annex to each provisional tax return and annual corporate tax return. It is key to identify the person who will be included in the disclosure by taking into account the explanations in the communiqué and conducting a detailed analysis. It is possible that these people may be held responsible for matters such as investigations and liabilities that may arise in the future in tax and other matters. In addition, there are still some question marks on the subject. I hope these questions will be answered in time.