![Presidential Decree On The Approval Of The Multilateral Competent Authority Agreement On The Automatic Exchange Of Financial Account Information Has Been Published](https://vergiport.com/blog/uploads/images/image_750x_5ea1dc6339a29.jpg)
International Tax Bulletin: 14.02.2020/1
International Tax Bulletin: 14.02.2020/1
Presidential Decree numbered 1965 was published on the Official Gazette dated 31.12.2019, which is related to the approval of the “Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information” signed in Paris on 21.04.2017 (hereinafter referred to as “Agreement”). The Agreement will enter into force following the completion of the domestic legal processes pursuant to Article 7 of the Agreement.
The Agreement envisages that the information will be automatically exchanged on annual basis. According to the Agreement, the notifications to be made by various “financial institutions”, including banks, custodial institutions, insurance companies and investment banks (including mutual funds), will include the following information:
On the other hand, two different dates has been determined as the starting time for the exchange of information. September 2018 is determined for new accounts and September 2018 or September 2019 are determined based on the date of determination that the existing account is in the scope of mandatory exchange of information. Accordingly, the relevant information will be subject to exchange within 9 months following the end of the relevant calendar year.
The developments regarding the process of signing the Agreement and the arrangements introduced with the Agreement are summarized as follows.
1- DEVELOPMENTS ON AUTOMATIC EXCAHNGE OF INFORMATION
Exchange of financial information has been initiated with the Foreign Accounts Tax Compliance Act – FATCA which was published by Ministry of Finance of the USA on 2010. Financial institutions outside of the USA are obliged to report the assets of their US taxpayer customers to the American Revenue Administration with the legislation of FATCA. The regulation basically aims to ensure that all US taxpayers' income will be recorded. In this respect, it attracted the attention of other countries, acting with the motive to protect tax revenues.
"Mutual Administrative Assistance Agreement in Tax Matters" which was signed by the Republic of Turkey during the G-20 summit held in Cannes, France on 03.11.2011 was approved by the law published in the Official Gazette on May 20th 2017. The relevant agreement stipulates the clauses with the aim of the fight against tax avoidance and evasion by a comprehensive cooperation between the countries. In addition, the agreement, prepared under the leadership of the Council of Europe with the Organization for Economic Cooperation and Development (OECD) and signed by many countries, constituted the legal basis for the reporting to be made under the common reporting standard.
"Financial Information in Tax Matters Concerning Automatic Exchange Standards" (Common Reporting Standard - CRS) was published in 21.07.2014 and Turkey has committed to comply with these standards in the same year.
Presidential Decree numbered 1965 was published on the Official Gazette dated 31.12.2019, which is related to the approval of the “Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information” signed in Paris on 21.04.2017. The Agreement will enter into force following the completion of the domestic legal processes pursuant to Article 7 of the Agreement.
2- MUTUAL ADMINISTRATIVE ASSISTANCE AGREEMENT
"Mutual Administrative Assistance Agreement in Tax Matters" which was prepared under the guidance of Organization for Economic Cooperation and Development (OECD) and Council of Europe was signed by Turkey on 03.11.2011 date along with many other countries. Turkish Parliament confirmed the approval of the agreement with Law no. 7018 which was published on the Official Gazette on 20.05.2017. The relevant agreement was approved by the Council of Ministers Decree numbered 2017/10969 which was published on the Official Gazette dated 26.11.2017. The enforcement date of the agreement in domestic law has been determined as 01.07.2019 by the Council of Ministers Decree numbered 2018/11790 and dated 26.06.2018.
In order to fight against tax loss and evasion, the relevant agreement stipulates a comprehensive cooperation between the parties on following matters:
A- Exchange of Information
Although a comprehensive exchange of information is foreseen in the agreement, this change is generally based on demand (exchange of information on demand). Accordingly:
B- Assistance on Tax Inspections
The agreement stipulates that one of the parties will initiate tax inspections abroad within the scope of concurrent tax inspections. According to this;
C- Assistance on Tax Collection
The agreement also stipulates to take steps towards the protection and collection of tax claims. According to this;
D- Assistance on Notification
The agreement enforces the notification of all other documents relating to the taxes, including judicial orders, to the applicant party at request.
3- MULTILATERAL COMPETENT AUTHORITY AGREEMENT ON THE AUTOMATIC EXCHANGE OF FINANCIAL ACCOUNT INFORMATION
“Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information” which was signed in Paris on 21.04.2017 and approved in the domestic law by the Presidential Decree numbered 1965 which was published on the Official Gazette on 31.12.2019 stipulated that financial information based on the Agreement will be automatically exchanged on annual basis.
“Multilateral Competent Authority Agreement on the Automatic Exchange of Financial Account Information” signed in Paris on 21.04.2017 is a framework agreement which ensures that each signatory countries have full control over on exchange relationship and the implementation of the privacy and personal data protection standards.
The legal basis of the Multilateral Competent Authority Agreement is the 6th article of the Mutual Administrative Assistance Agreement on Tax Issues, which enables automatic exchange of information between the parties within the framework determined by the Common Notification Standard (CRS).
A- Frequency of Exchange and Information to be Subject to Notification
The Agreement envisages that the information will be automatically exchanged on annual basis. According to the Agreement, notifications to be made by various “financial institutions”, including banks, custodial institutions, insurance companies and investment banks (including mutual funds), include the following information:
Annex A of the Agreement determined the list of countries which will be excluded from the exchange of information. The scope of the list on Annex A has not been completed by Turkey yet.
These notifications will be made by various “financial institutions”, including banks, custodial institutions, insurance companies and investment banks (including mutual funds).
B- Notification Date
Notification date is determined on the Agreement as following 9 months after the end of the calendar year of the relevant accounts, starting from the dates as follows:
C- Enforcement of the Agreement
The Agreement will enter into force in Turkey, following the completion of internal legal processes. Accordingly, Turkey will provide following information to “Coordinating Body Secretariat” of OECD after the implementation of relevant legislation, which requires to apply "The Common Reporting Standards" as soon as possible:
This Agreement will come into force between two Competent Authorities on the later of the following dates:
King Regards,