Turkey's Revenue Administration has announced the publication of Tax Procedure Law Circular 145, which clarifies the determination of ultimate real beneficiaries (beneficial owners) in accordance with Article 5 of General Communiqué No. 529. The General Communiqué, published in July 2021, regulated the determination of ultimate real beneficiaries (beneficial owners) of corporate taxpayers, collective companies, limited partnerships, ordinary partnerships, and trusts, as well as their notification to the Revenue Administration.

The Circular reiterates that for legal entities, ultimate real beneficiaries include:

• Natural persons holding more than 25% of the legal entity;
• The natural person or persons who ultimately control the legal entity, in cases where persons holding more than 25% of the legal entity are suspected of not being the real beneficiaries or no person holds more than 25% of the shares; and
• Natural persons with the highest executive authority, in cases where the real beneficiary cannot be determined according to the above two points.

The Circular further clarifies that natural persons holding more than 25% of the legal entity must be notified to the Revenue Administration in any case, and persons identified as having ultimate control or the highest executive authority are reported in the real beneficiary notification form with Necessary explanations.

The Circular also clarifies direct and indirect control, including that natural persons are considered final beneficiaries if they have direct or indirect control of at least 25% or do not have direct or indirect control of at least 25%, but have final control through different means. For example, if a natural person owns 80% of company B, which owns 40% of company A, then the person is considered to indirectly control 32% (80% x 40%) of company A and, as such, is a final beneficiary of company A. Regarding other means of final control, an example is provided where a natural person is the founder of a company they found and transferred all their shares in the company to their children but continues to work in the company as the chairman of the board of directors. In this case, the person is authorized to appoint or dismiss the majority of the people involved in the management of the company and is considered a final beneficiary even if not meeting the 25% holding condition.

Lastly, the Circular clarifies the meaning of highest executive authority for the purpose of the final beneficiary rules. This includes that the expression "natural persons with the highest executive authority" means the persons or persons who have the power to take strategic decisions that fundamentally affect the commercial activities of the legal entity, as well as senior executives such as the chairman of the board, general manager, etc. who carry out daily or ordinary business.