Turkey 2013 combined: phase 1 + phase 2

126 Pages·2013·1.385 MB·English

by  OECD

Global Forum on Transparency and Exchange of Information GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE
for Tax Purposes
OF INFORMATION FOR TAX PURPOSES
PEER REVIEWS, COMBINED: PHASE 1 + PHASE 2
TURKEY
Peer Review Report
The Global Forum on Transparency and Exchange of Information for Tax Purposes is the
multilateral framework within which work in the area of tax transparency and exchange of
information is carried out by 120 jurisdictions, which participate in the Global Forum on an Combined: Phase 1 + Phase 2
equal footing.
The Global Forum is charged with in-depth monitoring and peer review of the implementation
of the international standards of transparency and exchange of information for tax purposes.
These standards are primarily refl ected in the 2002 OECD Model Agreement on Exchange
of Information on Tax Matters and its commentary, and in Article 26 of the OECD Model
Tax Convention on Income and on Capital and its commentary as updated in 2004. The TURKEY
standards have also been incorporated into the UN Model Tax Convention.
The standards provide for international exchange on request of foreseeably relevant
information for the administration or enforcement of the domestic tax laws of a requesting
party. Fishing expeditions are not authorised but all foreseeably relevant information must be
provided, including bank information and information held by fi duciaries, regardless of the
existence of a domestic tax interest or the application of a dual criminality standard.
All members of the Global Forum, as well as jurisdictions identifi ed by the Global Forum
as relevant to its work, are being reviewed. This process is undertaken in two phases.
Phase 1 reviews assess the quality of a jurisdiction’s legal and regulatory framework for Pe
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the exchange of information, while Phase 2 reviews look at the practical implementation of r R
that framework. Some Global Forum members are undergoing combined – Phase 1 and ev
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Phase 2 – reviews. The Global Forum has also put in place a process for supplementary w
reports to follow-up on recommendations, as well as for the ongoing monitoring of Re
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jurisdictions following the conclusion of a review. The ultimate goal is to help jurisdictions o
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to effectively implement the international standards of transparency and exchange of t C
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information for tax purposes. m
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All review reports are published once approved by the Global Forum and they thus represent ine
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agreed Global Forum reports. P
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For more information on the work of the Global Forum on Transparency and Exchange of s
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Information for Tax Purposes, and for copies of the published review reports, please refer to 1
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www.oecd.org/tax/transparency and www.eoi-tax.org. P
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Consult this publication on line at http://dx.doi.org/10.1787/9789264192041-en. 2
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This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and UR
statistical databases. KE
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Visit www.oecd-ilibrary.org for more information.
ISBN 978-92-64-19203-4 -:HSTCQE=V^WUXY:
23 2013 10 1 P

Global Forum
on Transparency
and Exchange
of Information for Tax
Purposes Peer Reviews:
Turkey
2013
COMBINED: PHASE 1 + PHASE 2
March 2013
(reflecting the legal and regulatory framework
as at January 2013)
This work is published on the responsibility of the Secretary-General of the
OECD. The opinions expressed and arguments employed herein do not
necessarily reflect the official views of the OECD or of the governments of its
membercountriesorthoseoftheGlobalForumonTransparencyandExchange
ofInformationforTaxPurposes.
Thisdocumentandanymapincludedhereinarewithoutprejudicetothestatus
oforsovereigntyoveranyterritory,tothedelimitationofinternationalfrontiers
andboundariesandtothenameofanyterritory,cityorarea.
Pleasecitethispublicationas:
OECD(2013),GlobalForumonTransparencyandExchangeofInformationforTaxPurposesPeer
Reviews:Turkey2013:Combined:Phase1+Phase2,OECDPublishing.
http://dx.doi.org/10.1787/9789264192041-en
ISBN978-92-64-19203-4(print)
ISBN978-92-64-19204-1(PDF)
Series:GlobalForumonTransparencyandExchangeofInformationforTaxPurposesPeerReviews
ISSN2219-4681(print)
ISSN2219-469X(online)
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3
TABLE OF CONTENTS –
Table of Contents
About the Global Forum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Information and methodology used for the peer review of Turkey . . . . . . . . . . . . 9
Overview of Turkey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Recent developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Compliance with the Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
A. Availability of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
A.1. Ownership and identity information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
A.2 Accounting records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
A.3. Banking information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
B. Access to Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
B.1. Competent Authority’s ability to obtain and provide information. . . . . . . . 71
B.2. Notification requirements and rights and safeguards. . . . . . . . . . . . . . . . . . 82
C. Exchanging Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
C.1. Exchange of information mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
C.2. Exchange of information mechanisms with all relevant partners . . . . . . . . 94
C.3. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
C.4. Rights and safeguards of taxpayers and third parties. . . . . . . . . . . . . . . . . . 97
C.5. Timeliness of responses to requests for information . . . . . . . . . . . . . . . . . . 99
PEER REVIEW REPORT – COMBINED PHASE1 AND PHASE 2 REPORT – TURKEY © OECD 2013
4
– TABLE OF CONTENTS
Summary of Determinations and Factors UnderlyingRecommendations. . . 107
Annex1: Jurisdiction’s Response to the Review Report . . . . . . . . . . . . . . . . . 113
Annex2: List of All Exchange-of-Information Mechanisms Signed . . . . . . . 114
Annex3: List Of All Laws, Regulations andOtherMaterialConsulted. . . . 119
Annex4: People Interviewed During On-Site Visit . . . . . . . . . . . . . . . . . . . . . 121
PEER REVIEW REPORT – COMBINED PHASE1 AND PHASE 2 REPORT – TURKEY © OECD 2013
5
ABOUT THE GLOBAL FORUM –
About the Global Forum
The Global Forum on Transparency and Exchange of Information for Tax
Purposes is the multilateral framework within which work in the area of tax
transparency and exchange of information is carried out by over 100 jurisdic-
tions, which participate in the Global Forum on an equal footing.
The Global Forum is charged with in-depth monitoring and peer review of
the implementation of the international standards of transparency and exchange
of information for tax purposes. These standards are primarily reflected in the
2002 OECD Model Agreement on Exchange of Information on Tax Matters
and its commentary, and in Article26 of the OECD Model Tax Convention on
Income and on Capital and its commentary as updated in 2004. The standards
have also been incorporated into the UN Model Tax Convention.
The standards provide for international exchange on request of foreseeably
relevant information for the administration or enforcement of the domestic tax
laws of a requesting party. Fishing expeditions are not authorised but all fore-
seeably relevant information must be provided, including bank information
and information held by fiduciaries, regardless of the existence of a domestic
tax interest or the application of a dual criminality standard.
All members of the Global Forum, as well as jurisdictions identified by the
Global Forum as relevant to its work, are being reviewed. This process is under-
taken in two phases. Phase1 reviews assess the quality of a jurisdiction’s legal and
regulatory framework for the exchange of information, while Phase2 reviews look
at the practical implementation of that framework. Some Global Forum members
are undergoing combined – Phase1 and Phase2 – reviews. The ultimate goal is to
help jurisdictions to effectively implement the international standards of transpar-
ency and exchange of information for tax purposes.
All review reports are published once adopted by the Global Forum.
For more information on the work of the Global Forum on Transparency and
Exchange of Information for Tax Purposes, and for copies of the published review
reports, please refer to www.oecd.org/tax/transparency and www.eoi-tax.org.
PEER REVIEW REPORT – COMBINED PHASE1 AND PHASE 2 REPORT – TURKEY © OECD 2013

7
EXECUTIVE SUMMARY –
Executive Summary
1. This report summarises the legal and regulatory framework for
transparency and exchange of information in Turkey as well as the practi-
cal implementation of that framework. The international standard which is
set out in the Global Forum’s Terms of Reference to Monitor and Review
Progress Towards Transparency and Exchange of Information, is concerned
with the availability of relevant information within a jurisdiction, the compe-
tent authority’s ability to gain timely access to that information, and in turn,
whether that information can be effectively exchanged with its exchange of
information (EOI) partners.
2. Geographically, Turkey forms a natural bridge between the conti-
nents of Asia, Africa and Europe. This unique geographical position gives it
easy access to strategically important trade areas. Its location and economic
relations with various countries is reflected in an extensive network of 82
double taxation treaties and five tax information exchange agreements,
which provide for international exchange of information for tax purposes in
line with the international standard. In addition, Turkey has also signed the
Convention on Mutual Administrative Assistance in Tax Matters.
3. Turkey allows for the formation of companies, partnerships, founda-
tions, associations and cooperatives. Turkey’s legal and regulatory framework
ensures that information on the owners of these entities and arrangements
is available to its competent authority. Sufficient mechanisms are in place
that allow identification of the owners of bearer shares issued by publicly
held joint stock companies whose shares are traded on the stock exchange.
However, availability of information on the owners of bearer shares issued
by other joint stock companies is not ensured resulting into determination of
the Element A.1 as “not in place”.
4. Turkey’s tax and commercial legislation contain provisions ensuring
the maintenance of accounting information to the standard by all relevant
entities for at least five years. Underlying documents must also be maintained.
The combination of the Banking Law and the AML/CFT legislation ensures
that all records pertaining to accounts as well as to related financial and trans-
actional information is required to be kept by banks operating in Turkey.
PEER REVIEW REPORT – COMBINED PHASE1 AND PHASE 2 REPORT – TURKEY © OECD 2013
8
– EXECUTIVE SUMMARY
5. The tax administration and tax inspectors are empowered to obtain
information from taxpayers and third parties including banks, however, the
legislative basis on which they obtain information for EOI purposes should
be clarified in Turkish laws. Tax inspectors can also use compulsory powers
to enforce compliance in case of non-cooperation. In practice, the competent
authority generally obtains information through tax inspectors, who normally
conduct tax audits to gather information.
6. Tax inspectors should give greater priority to their EOI work. They
have a high workload and historically have not generally provided informa-
tion to the competent authority before the completion of the tax audit which
may take six to 12 months. In most cases, this process of gathering infor-
mation results in delays and the issue of delayed receipt or non-receipt of
information was identified as a problem in the peer input of partner countries.
Since 2011, the tax inspectors are required to complete investigations for
the purposes of exchange of information in six months and this reduction in
time limit is likely to reduce delays in providing information. This should be
monitored by Turkey.
7. Turkish tax authorities are authorised to seek information from bar-
risters and solicitors about the names of their client and information relating
to their fees and expenses but information that reveal facts and particulars
which have been entrusted to them or which they have learnt through their
duties cannot be obtained. The protection afforded to professional privilege
is very broad and is not consistent with the international standard.
8. During the three year review period ending December 2011, Turkey
has received 518 requests for information from 37 different jurisdictions.
Turkey has provided the requested information substantially or partially in
260 cases. Information in 11% of the cases was provided within 90 days. In
about 41% of the cases information was provided after one year. The compe-
tent authority has recently begun to systematically provide status updates to
exchange of information partners when requests are not responded to within
90 days.
9. Notwithstanding the need to strengthen various areas of Turkey’s
system relating to exchange of information, Turkey’s peers indicated that
Turkey is a very important and valued partner exchanging a significant
amount of information in tax matters. A follow-up report on the steps under-
taken by Turkey to answer the recommendations made in this report should
be provided to the Peer Review Group within six months of the adoption of
this report.
PEER REVIEW REPORT – COMBINED PHASE1 AND PHASE 2 REPORT – TURKEY © OECD 2013