Turkey ratified the Multilateral Competent Authority Agreement for Automatic Exchange of Financial Account Information at the end of 2019, officially becoming part of it and of The Standard for Automatic Exchange of Financial Information in Tax Matters as from April 21st 2017.
The Standard for Automatic Exchange of Financial Information in Tax Matters, also known as Common Reporting Standard (“CRS”) is an information standard, created by the Organisation for Economic Co-operation and Development (“OECD”), for the reporting of financial information among signatory parties. The CRS includes more than 100 countries, including Turkey, and is designed to record taxable incomes and prevent tax evasion.
CRS was developed in response to the G20 request and calls on jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis. It sets out the financial account information to be exchanged, the financial institutions required to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions. It was developed by virtue of Article 6 of the Convention on Mutual Administrative Assistance in Tax Matters.
The Multilateral Competent Authority Agreement (“the MCAA”) is a multilateral framework agreement that provides a standardised and efficient mechanism to facilitate the automatic exchange of information in accordance with the CRS. It avoids the need for several bilateral agreements to be concluded. The text and signatories of the MCAA can be found here.
As per the MCAA, each jurisdiction shall automatically exchange information regarding financial accounts, such as name, address, tax identification number and other personal information of account holders, balance of the account as of the end of the year, interest accrued to savings accounts and other related information. Information shall be exchanged within 9 months following the year to which the information is related.
Turkey had already signed bilateral Competent Authority Agreements on Automatic Exchange of Information with Latvia and Norway at the end of 2018 but did not become a part of the MCAA until the ratification on December 31st 2019. The Turkish Tax Administration is expected to declare secondary regulations in regard to financial institutions’ collecting and transmitting the information to the Tax Administration.
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