TRANSACTIONS SUBJECT TO THE OBLIGATION OF EXTENSION 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 returns, 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.
1. 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 the simple method, farmers who are obliged to keep books and tax-exempt tradesmen are obliged to certify. Collections and payments of TRY 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.
2. Groups Excluded from 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,
- Authorized foreign exchange as defined in Decree No. 32 on the Protection of the Value of the Turkish Currency
foreign exchange trading transactions of foreign exchange institutions,
- Collections and payments made in return for transactions carried out 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 authorized to trade in the Precious Metals Market within Borsa Istanbul.
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 are already recorded by different methods .
3. 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 TL 8,700,000.
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 realization of collections and payments above a certain amount 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 for both individual taxpayers and institutions to pay attention to these regulations while fulfilling their financial and legal responsibilities.
Although the Communiqué states that transactions under TL 7,000 are not required to be carried out through intermediary financial institutions, it is the safest way in terms of sector practices to record all payments through intermediary financial institutions regardless of the amount, especially when the practical and practical implications are considered.
