The Turkish National Assembly has recently passed a law
ratifying the Convention on Mutual Administrative Assistance in
Tax Matters. The OECD has also issued a notification that
Turkey is the 88th country to sign the Multilateral Competent
Authority Agreement on Automatic Exchange of Information.
In this regard, the Turkish tax authorities have prepared a
draft communiqué adapting the OECD's common reporting
standard (CRS) into Turkish tax legislation. Based on the draft
communique, the CRS will be applicable from July 1 2017.
Accordingly, the financial institutions (FIs) will be
obliged to regularly inform the Revenue Administration of
Finance Ministry about the financial accounts of non-residents
in Turkey on a yearly basis.
Scope of the draft communiqué
Under the draft communiqué, the following FIs will be
subject to reporting obligations:
- Deposit institutions;
- Investment institutions; and
- Insurance companies.
The financial accounts subject to reporting are those held
by FIs, such as:
- Depository accounts;
- Custodial accounts;
- Equity and debt interest in certain
- Cash value insurance contracts; and
- Annuity contracts.
We understand from the explanations in the draft
communiqué that in line with OECD's CRS, due diligence
procedures will be conducted by FIs on the below accounts:
- Pre-existing individual accounts;
- New individual accounts;
- Pre-existing entity accounts; and
- New entity accounts.
According to the draft general communiqué:
- Reporting is required on compulsory
- Reporting on financial accounts will be
made by FIs until the end of May 31 of the calendar year
following the respected reporting year; and
- Reporting will be electronically delivered
by FIs to the Turkish Revenue Administration.
To this point, the reporting for the year 2017 will not be
made for the first six months of the year, but the first
notification for the second six months (from July 1 2017 to
December 31 2017) will be made by FIs until May 31 2018.
FIs will make reporting through the "B-Trans Electronic
System of the Revenue Administration". According to this, FIs
that have a reporting obligation will first obtain their
username and password through the B-Trans system.
In order to complete the reporting process by defining the
username and password, FIs must send a petition to the Revenue
Administration within seven days following the publication of
the general communiqué.
Failure to comply with notification obligations
If the reporting obligation is not followed, incomplete or
misleading reporting is made, or if the rules and procedures
regarding the reporting are not complied with, it is stated in
the draft communiqué that a special irregularity penalty
will be imposed for each reporting obligation in accordance
with the Tax Procedure Code.
The draft communiqué on automatic exchange of
information will bring significant obligations to FIs in
Turkey. For that reason, it is advisable that FIs fulfil their
due diligence obligations in accordance with the disclosures in
the draft communiqué.
Furthermore, Turkey has not released the list of countries
Turkey will automatically exchange financial accounts, yet. For
this reason, it will be appropriate for FIs to base their
reporting on the list to be released by the Turkish tax
Burçin Gözlüklü (firstname.lastname@example.org)
and Ramazan Biçer (email@example.com)
Tel: +90 216 504 20 66 and +90 216 504 20 66