TRANSACTIONS THAT ARE OBLIGED TO BE EXTENDED UNDER TURKISH LAW
Certification, which means proving and documenting a certain transaction or situation, has an important place in our law in terms of ensuring that financial transactions are transparent and auditable. The obligation of certification, which plays a vital role in areas such as commercial transactions, financial reporting and tax declarations, is supported by many legal regulations, especially tax regulations. According to the General Communiqué on Tax Procedure Law No. 459 (“Communiqué”), certain groups are obliged to certify their payments and collections.
Groups included in the scope of the Communiqué
Pursuant to the Communiqué; first and second class merchants, self-employed persons, merchants whose earnings are determined in simple method, farmers who are obliged to keep books and tax-exempt tradesmen are obliged to certify. Collections and payments of TL 7,000 and above to be made by the specified groups must be made through “intermediary financial institutions” (banks, electronic money institutions, etc.). The fact that payments will be made through intermediary financial institutions serves the purposes of transparency and prevention of informality, just like the obligation of certification.
Groups Excluded from the Scope of the Communiqué
Within the scope of the Communiqué, there are some transactions that do not require certification, and the use of intermediary financial institutions is not mandatory for the transactions listed below:
- Transactions with capital market intermediary institutions as defined in the Capital Markets Law,
- Foreign exchange purchase and sale transactions of authorised foreign exchange institutions as defined in the Decree No. 32 on the Protection of the Value of the Turkish Currency,
- Collections and payments made in return for the transactions performed at the land registry offices,
- Collections and payments made in return for transactions performed at notaries,
- Transactions made within the scope of the activities of those authorised to trade in the Precious Metals Market within Borsa Istanbul A.Ş.
The reason for not requiring the existence of financial intermediary institutions and the obligation of certification in the execution of the transactions mentioned above is that the transactions mentioned above are already recorded by different methods.
Penalty to be applied in case of breach of the obligation to certify
In case of non-compliance with the obligation to certify, a special irregularity penalty of 5% of the transactions will be imposed on all taxpayers who do not comply with the obligation to certify in accordance with the repeated Article 355 of the Tax Procedure Law No. 213, not less than the penalties specified in the relevant article for each transaction, but the special irregularity penalty to be imposed within the calendar year will not exceed a total of 8.700.000 TL.
GRC LEGAL Comment
In Turkish Law, the obligation of certification is an important regulation that aims to ensure financial discipline by encouraging the documentation and recording of commercial transactions. The fact that collections and payments above a certain amount are made through intermediary financial institutions increases the auditability and transparency of transactions. Since the special irregularity penalty in case of non-compliance with the certification obligation acts as a deterrent, it is of great importance that both individual taxpayers and institutions pay attention to these regulations while fulfilling their financial and legal responsibilities.
Although it is stated in the Communiqué that transactions under TL 7,000 are not required to be carried out through intermediary financial institutions, it is seen that it is the safest way in terms of sectoral practices to record all payments through intermediary financial institutions regardless of the amount.
