Upon the Presidential Decree No. 4025 published in the Official Gazette dated 01.06.2021 the effective date of the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information has been determined as 03.02.2021 for fiscal years starting from 01.01.2019.
The aforementioned international multilateral agreement envisages automatic exchange of information between countries in order to take tax measures and aims to facilitate rapid and more effective cooperation between the tax administrations of the signatory countries.
Under the provisions of the agreement, in case of resident of the signatory parties hold financial asset and/or income in other signatory countries, it is envisaged that information is subject to be shared automatically within certain periods without any further request, with the Revenue Administration of the state which the person is resident in the state where the financial asset or income is located.
As of the date when the Agreement enters into force in our domestic law (01.06.2021), the information packages for the FY2019 and following years, will be automatically shared with the counterparties by Turkey within 9 months following the end of the relevant year. In line with this calendar, the first information exchange will be completed in September 2021 for FY2019 and FY2020.
With the entry into force of the agreement, it means that 57 new countries will participate in the automatic information exchange that was previously made with only 2 countries (Norway and Latvia) via bilateral agreements (1).
Among the states included in the information exchange list with the Agreement are countries such as Switzerland, Hong Kong (China), Ireland, Luxembourg, Malta, Russia, Singapore, Switzerland and the United Kingdom. Nonetheless, countries such as the Netherlands, Belgium, Germany, France and the United Arab Emirates are not a part of automatic exchange yet.
Within the scope of information exchange, it is envisaged that the name-surname/title, address, tax identification number (TIN), bank or financial institutions account numbers, the year-end account balances of the persons and entities (residents) and the passive incomes in the accounts such as interest, dividend, etc. will be reported.
Further to ratification, we are of the opinion that it would be beneficial to evaluate the proposal of the law, which was discussed on General Assembly of the Grand National Assembly of Turkey and named as tax amnesty in the public, and the provisions of the current “asset peace” as a whole and for taxpayers, to determine their positions accordingly. It is because after the information exchanges to be made, the information to be obtained by the relevant authorities is expected to be effectively evaluated for tax compliance purposes by the Fiscal Administration.