Turkey: Certification requirement for tax and other purposes

Transcription

1 announcement 02 February 2001 Turkey: Certification requirement for tax and other purposes custody Clearstream Banking Luxembourg ( CBL ) is pleased to announce details of the certification required for customers holding Turkish equities in CBL. Clearing and settlement procedures for Turkish equities are given in the accompanying CBL Announcement A022 dated 2 February 2001 and the new pages of the CBL Domestic Links Guide (Turkey) dated 2 February Prior to holding Turkish equities in an account with CBL, customers must provide CBL with a duly signed Certification requirement for tax and other purposes (see Appendix ). This certification includes a certification for Turkish tax purposes ( Certification for Turkish tax purposes ) and an undertaking enabling orders to be executed in the context of corporate events ( Undertaking in relation to orders placed and executed through CBL's depository ). Outline of Turkish tax regulations Withholding tax on dividends Dividends distributed by a Turkish public company are generally subject to withholding tax at the rate of 5.5% (5% plus a 10% surcharge tax) paid by the issuing company. This rate is increased to 16.5% (15% plus a 10% surcharge tax) on dividends paid by non-publicly traded corporations. This has the effect of reducing the total amount available for distribution. Dividends paid to shareholders are not subject to further withholding tax. Corporate tax and income tax Non-residents are generally taxable in Turkey on their income from Turkish sources, including capital gains realised on Turkish equities. Under general Turkish tax law, non-resident foreign corporations will be subject to 33% corporation tax (30% plus a 10% surcharge tax) and 16.5% income tax (15% plus a 10% surcharge) on the remaining 67% amounting in effect to 44.06% tax on capital gains realised on Turkish equities, payable within 15 days of realisation. However, foreign investment funds may qualify for the special treatment from which Turkish Type-A and Type-B investment funds benefit (Corporate Tax Communiqué number 45 of November 1993, as amended), and it is market practice for certain other foreign institutions or bodies, including institutions with portfolio management activities and even custodian banks, to be treated as Type-A or Type-B investment funds too. Type-A investment funds are exempt from corporate tax and are liable to 0% income tax on dividends and capital gains on Turkish equities (and on interest and capital gains on Turkish debt securities). A Type-A investment fund must maintain at least 25% of its Turkish securities portfolio in equities on a monthly average basis, throughout the year, failing which it becomes a Type-B investment fund for the entire year. Type-B investment funds are subject to 11% income tax (10% plus a 10% surcharge tax) on their total annual income, including dividends and capital gains realised on Turkish equities (and interest and capital gains realised on custody custody 02 February 2001 A024 (1)

2 custody Turkish debt securities), payable on 20 May of the following year. They are not subject to corporate tax. To be treated for Turkish tax purposes as a Type-A or Type-B investment fund, eligible non-resident persons or bodies must first appoint a Permanent Representative in Turkey. The role of the Permanent Representative includes registering the non-resident entity with the Turkish tax authorities, maintaining the books and records with respect to Turkish securities and cash transactions, preparing annual tax returns and paying any tax due on behalf of the non-resident. Penalties for late payment Late payments of Turkish tax due are subject to a penalty, currently at the cumulative rate of 5% per month, payable to the Turkish tax authorities. According to CBL s information, the statute of limitations applicable is currently five years after the end of the year in which payment of the tax was due. custody Clearstream Banking service offering CBL has opened an omnibus Type-A investment fund account, for which CBL s depository bank will act as permanent representative in Turkey. As long as Type-A status is not rejected by the Turkish authorities, capital gains realised on Turkish equities held by CBL in this account will not be subject to Turkish taxation. Dividends will not be subject to Turkish taxation other than the withholding tax paid by the issuer as described above. However, there is legal uncertainty as to the availability under Turkish law of treatment as a Type-A Investment Fund for non-resident investors and for custodians, particularly when operating omnibus accounts in which Securities are held for more than one investor, even though this is market practice. Therefore, CBL will only hold Turkish Securities for customers that have provided CBL, by 10:00 on the business day preceding receipt of the Securities, with a Certification in relation to Turkish Securities ( Appendix ) whereby, among others, the customer: recognises his awareness of this legal uncertainty, of the risk that Type-A fund tax treatment may be subsequently rejected by the Turkish authorities with retroactive effect, and of the tax and penalties that may become due in that event; and indemnifies CBL for any tax, penalties and other costs that may be incurred in that event. custody Further information For further information, please consult the new pages of the CBL Domestic Links Guide (Turkey) or contact your Customer Service Officer or Customer Relationship Manager. 02 February 2001 A024 (2)

3 Appendix. Certification in relation to Turkish Securities Date: Clearstream Banking 67 Bd Grande-Duchesse Charlotte L-2967 Luxembourg Attention: Securities Management, Domestic Markets, Turkey Subject: Certification for Turkish tax purposes Dear Sir/Madam, The undersigned customer of Clearstream Banking, société anonyme, Luxembourg (CBL) may hold from time to time in its securities account (the Account ) with CBL, equity securities issued by entities organised under the laws of the Republic of Turkey (the Securities ). Certification for Turkish Tax Purposes We hereby certify that the Securities in the Account are held for the account of a person or body that qualifies or of persons or bodies that qualify for Turkish tax purposes for treatment as a Type-A Investment Fund according to Turkish law. We undertake to notify CBL immediately if we have knowledge that this is not the case and to withdraw the Securities from CBL in such an event. We are aware that: there is legal uncertainty as to the availability under Turkish law of treatment as a Type-A Investment Fund for non-resident investors and for custodians, particularly when operating omnibus accounts in which Securities are held for more than one investor; treatment as a Type-A Investment Fund may be rejected by the Turkish authorities with retroactive effect; if the person or body for which the Securities are held does not qualify for treatment as a Type-A Investment Fund, such person or body: - may be subject to Turkish income tax on dividends and capital gains realised on Turkish equities as a real person; or - will be subject to 33% corporation tax (30% plus a 10% surcharge tax) and 16.5% income tax (15% plus a 10% surcharge) on the remaining 67% amounting in effect to 44.06% tax on capital gains realised on Turkish equities and debt securities, payable within 15 days of realisation, as a non-resident corporation that does not qualify to be treated as a Type-A or a Type-B Investment Fund or that hasn t fulfilled the conditions to be treated as such (e.g. does not have a permanent representative in Turkey); or - will be subject to 11% income tax (10% plus a 10% surcharge tax) on their total annual income, including dividends and capital gains realised on Turkish equities and interest and capital gains realised on Turkish debt securities, payable on 20 May of the following year based on the annual tax return, as a person or body that qualifies to be treated as a Type-B Investment Fund; if the person or body for which the Securities are held ceases to qualify for treatment as a Type-A Investment Fund, then it must be treated otherwise for the entire year during which it ceased to be eligible for such treatment; late payments of Turkish tax due are subject to a penalty, currently at the cumulative rate of 5% per month, payable to the Turkish tax authorities. If, for example, the Turkish authorities were to eventually reject the Type-A investment fund tax treatment of Turkish securities deposited with CBL, tax and penalties could be due with respect to the capital gains realised and the dividends received during the five years preceding the date of such assessment. 2 February 2001 A024 (3)

4 We agree irrevocably that we shall indemnify CBL for any loss, claim, liability or expense including penalties, tax and interest thereon (and reasonable expenses of counsel) incurred by CBL as a result of having relied on this Certification for Turkish Tax Purposes and CBL may charge our account or otherwise reclaim from us and we will pay CBL on demand the amount of such charge or loss and any other expenses incurred by CBL in pursuing its claim. We hereby appoint Clearstream Banking and Clearstream Banking s depository for Turkish securities as our attorneys-in-fact with authority to collect and forward this certificate and any information or documents related hereto to the Turkish authorities or other persons to the extent required by Turkish law or regulations. We hereby certify that the above information is true, correct and complete and that I am (we are) authorised representative(s) of the customer named below. Undertaking in relation with orders placed and executed through CBL s depository We hereby undertake to provide CBL with information on the identity of end clients on whose behalf we place orders, and other information and documents associated with their transactions, which we will execute through CBL s depository for Turkish securities in Turkish securities markets, when required by and within the period stated by the Sermaye Piyasasi Kurulu (Capital Markets Board of Turkey). By (authorised signatories): Name of customer: Residence for tax purposes): (full address) Signature: Signature: Name (Print): Name (Print): Title: Title: Date: Date: Place: Place: 2 February 2001 A024 (4)

5 Announcement Custody A March 2003 Turkey: Change to the account structure and certification requirements for tax purposes Clearstream Banking 1 hereby advises customers holding Turkish equities with Clearstream Banking of a change to the account structure and certification requirements for tax purposes. Customers currently holding Turkish equities with Clearstream Banking must comply with the segregation of assets and certification requirements as outlined below not later than 21 March 2003 Clarifications to the Turkish tax regulations as explained in Announcement A024 dated 2 February 2001 As stated in the Clearstream Banking Announcement A024 dated 2 February 2001, Clearstream Banking opened an omnibus account Type-A Investment Fund account for Turkish equities that benefited from favourable tax treatment and for which Clearstream Banking s depository was acting as permanent representative in Turkey. However, there was legal uncertainty whether non-resident investors and custodians particularly those operating omnibus accounts with one Tax ID in which Turkish equities are held for more than one investor ( umbrella Type-A Investment Fund account) would be classified under Turkish law as a Type-A Investment fund. Recently, Clearstream Banking has been informed that the Turkish tax authorities have challenged the favourable treatment of non-resident investors and custodians as a Type-A Investment Fund as explained above. According to the new rules as defined below, when transactions are performed in Turkey on behalf of non-resident mutual funds whose portfolios are managed by custodians, the mutual fund will be considered as the recipient of the income and no longer the custodian. Consequently, Clearstream Banking can no longer maintain an umbrella Type-A Investment Fund account in Turkey. In order to be considered as a Type-A Investment Fund under Turkish law each non-resident mutual fund will have to: Qualify for Turkish tax purposes as a mutual fund as set in Turkish law; Appoint only one Permanent Representative in Turkey; Be registered as a taxpayer; Maintain at least 25% of its Turkish securities portfolio in equities on a monthly average basis, throughout the year. 1. Clearstream Banking in this Announcement refers collectively to Clearstream Banking Frankfurt (CBF) and Clearstream Banking Luxembourg (CBL). CBF and CBL are Deutsche Börse Group companies. 13 March 2003 A021 (1)

6 Definition of non-resident mutual fund The definition of the non-resident mutual fund shall be determined in accordance with the following: For purposes of the Capital Market Board applications, it has been deemed as appropriate to consider the great variety of non-resident institutional portfolio management entities such as pension funds and social security institutions who are engaged in portfolio management activities, as well as foreign institutional portfolio management entities established by such funds and institutions such as funds and partnerships, national funds, investment companies, mutual funds, unit trusts as mutual funds established in accordance with the Capital Market Law for purposes of financial legislation applications. Based on the above definition and clarifications obtained from the market, it is Clearstream Banking s understanding that every corporate investor (i.e. other than individual) is considered as a mutual fund. Consequently, the definition of a mutual fund is applicable to Clearstream Banking customers and their underlying customers that are not individuals. Clearstream Banking service offering Transactions on Turkish equities held with Clearstream Banking may be settled either in the domestic market (external transactions), internally within Clearstream Banking between two Clearstream Banking customers, and in the regulated unofficial market of the FSE (Freiverkehr) 1. All these transactions are impacted by the new rule as outlined below. Certification requirements Clearstream Banking will hold Turkish equities only for: Customers that qualify as Type-A Investment Funds (hereinafter referred to as mutual funds ) and who hold the assets either for their own account or on behalf of individuals; and Customers whose underlying customers, which are corporate investors, qualify as mutual funds. Customers currently holding Turkish equities with Clearstream Banking are required to: Segregate the assets per qualifying mutual fund; i.e. customers must segregate the Turkish equities they hold for their own account from the assets they hold on behalf of their underlying customers that are mutual funds. Furthermore, in one account assets may be held only for one mutual fund. Provide Clearstream Banking with Certificate in relation to Turkish Equities (see Appendix 1) not later than 21 March 2003 One Certificate in relation to Turkish equities must be submitted for each account in which Turkish equities are held for a qualifying mutual fund. The certification must be sent first by fax: Clearstream Banking Att. SG1 - Settlement Global Fax number: +49 (0) and the original certification sent by mail to: Clearstream Banking Att. CDT - Tax Services 7, Z.A.I. Bourmicht L-2967 Luxembourg Luxembourg 1. )6(DSSOLFDEOHRQO\WR&%)FXVWRPHUV 13 March 2003 A021 (2)

7 A customer that wishes to hold Turkish equities with Clearstream Banking must comply with the segregation of assets and certification requirements by 10:00 on the business day preceding receipt of the equities in the customer s account with Clearstream Banking. Failure to segregate the assets per mutual fund and provide Clearstream Banking with complete documentation by the prescribed deadline will result in the customer not being eligible for holding the Turkish equities with Clearstream Banking. Upon receipt of the certification Clearstream Banking will request through its depository the registration of each mutual fund as a taxpayer for tax purposes in Turkey and the allocation of a Tax ID. The Tax IDs obtained will be communicated to customers by SWIFT or by other authenticated means of communication used by Clearstream Banking. It is anticipated that the Tax IDs are allocated in Turkey immediately upon request. Important: Customers and their underlying customers that qualify as mutual funds holding Turkish equities with Clearstream Banking, who have already appointed a Permanent Representative in Turkey and who have obtained a Tax ID must provide Clearstream Banking with this information in the Certificate in relation to Turkish Equities in order for Clearstream Banking and its depository to submit the information to the respective Permanent Representatives for accounting purposes. Instruction requirements In order to settle transactions in Turkish equities through Clearstream Banking including FSE, customers are required to include the appropriate Tax ID in their settlement instructions. Customers must identify the Tax ID in the field appropriate to the instruction medium as follows: Cedcom field: Narrative field SWIFT (MT54x) tag :70E::SPRO//Tax ID details (Sequence B) CreationOnline field: Settlement Processing Narrative Telex line: O Failure to include the appropriate Tax ID in the settlement instruction will result in Clearstream Banking being unable to settle the customer s instruction. Further information The Clearstream Banking Customer Tax Guide, which is available on the Clearstream Banking web site, will be updated to reflect these changes in due course. For further information, please contact the Tax Help Desk or your Customer Relationship Manager. 13 March 2003 A021 (3)

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9 Appendix 1. Certificate in relation to Turkish Equities Clearstream Banking Attention: CDT - Tax Services 7 Z.A.I. Bourmicht L Luxembourg Date: Subject: Certificate for Turkish tax purposes Dear Sir/Madam, The undersigned customer of Clearstream Banking ( CB ), may hold from time to time in its securities account (the Account ) with CB, equities issued by entities organised under the laws of the Republic of Turkey (the Securities ). Certification for Turkish Tax Purposes We hereby certify that (tick boxes as appropriate): 1. c We are the sole holder of any such securities we may deposit from time to time in the account, that qualifies - for Turkish tax purposes - for treatment as a Type-A Investment Fund ( mutual fund ) according to Turkish law (i.e. we hold the assets for our own account or on behalf of individuals). We undertake, on any relevant date upon request, to provide you with the Articles of Association as proof of our status as entered on this form. AND c OR c We have not been registered as a taxpayer for tax purposes in Turkey and we have not appointed a Permanent Representative in Turkey. We hereby appoint CB s depository as our sole Turkish Permanent representative and request to be registered as a taxpayer for tax purposes in Turkey. We have already been registered as a taxpayer for tax purposes in Turkey; our Tax ID is and our Permanent Representative in Turkey is We hereby undertake to provide CB with a new Certificate in relation to Turkish equities, if on any date, we hold any such securities on behalf of a third party beneficial owner. 2. c We are not the owner of all Securities that we may hold from time to time in the above-mentioned account but that the Securities in the account are held for the account of our underlying customer that is a person or body that qualifies for Turkish tax purposes - for treatment as a Type-A Investment Fund ( mutual fund ) according to Turkish law. We undertake, on any relevant date upon request, to provide you with the Articles of Association of the underlying customer as proof of its status as entered on this form. AND c OR c We appoint CB s depository as the sole Turkish Permanent Representative of the underlying customer that qualifies as mutual fund and whom we request to be registered as a taxpayer for tax purposes in Turkey. The name and address of the underlying customer for registration purposes is: The underlying customer that qualifies as mutual fund has already been registered as a taxpayer for tax purposes in Turkey with the Tax ID and has appointed as its Permanent Representative in Turkey. 13 March 2003 A021 (5)

10 We hereby undertake to provide CB with a new Certificate in relation to Turkish Equities, if on any date we hold any securities on behalf of other third party holders that qualify as mutual funds. We agree irrevocably that we shall indemnify CB for any loss, claim, liability or expense including penalties, tax and interest thereon (and reasonable expenses of counsel) incurred by CB as a result of having relied on this Certification for Turkish Tax Purposes and CB may charge our account or otherwise reclaim from us and we will pay CB on demand the amount of such charge or loss and any other expenses incurred by CB in pursuing its claim. We hereby appoint CB and CB s depository for Turkish securities as our attorneys-in-fact with authority to collect and forward this certificate and any information or documents related hereto to the Turkish authorities or other persons, e.g. Permanent Representatives already appointed in Turkey, to the extent required by Turkish law or regulations. We hereby certify that the above information is true, correct and complete and that I am (we are) authorised representative(s) of the customer named below Undertaking in relation with orders placed and executed for Turkish equities We hereby undertake to provide CB with information on the identity of end clients on whose behalf we place orders, and other information and documents associated with their transactions which we execute through CB, through CB s depository for Turkish equities in Turkish equities markets or through Freiverkehr (FSE), when required by and within the period stated by the Sermaye Piyasasi Kurulu (Capital Markets Board of Turkey). By (authorised signatories): Authorised Signatory Name Title Authorised Signatory Name Title Place 13 March 2003 A021 (6)

11 Announcement Tax A December 2006 Turkey: Important amendments to tax legislation Following the issue by the Turkish Ministry of Finance of a revised Communiqué No.258, Clearstream Banking 1 hereby informs customers that, effective 1 January 2007 amendments have been made to temporary Article 67 of the income tax law that affect taxation on capital gains and interest income under the new tax regime 2. The subjects of these amendments are as follows: Requirement to provide a Certificate of Residence; Restricted application of trade price in OTC transactions. Requirement to provide a Certificate of Residence Non-resident investors may be required (see Local opposition to the requirement below) to provide a Certificate of Residence in order to continue to be exempt from taxation on capital gains and interest income under the new tax regime. Note: Dividend withholding tax remains unaffected by the foreseen changes. The following withholding tax rates are applicable in the amended tax legislation: Resident investors 10% Non-resident institutional investors: - That do not provide a Certificate of Residence after 1 January % - That do provide a Certificate of Residence after 1 January % Non-resident individual investors: - That did not provide a Certificate of Residence after 7 July % - That did provide a Certificate of Residence after 7 July % The Certificate of Residence must be renewed by non-resident institutions every three years and by non-resident individuals every year. Local opposition to the requirement Local sub-custodians are currently lobbying the Turkish Tax Authorities for the abolition of this requirement for a Certificate of Residence in the case of non-resident institutional investors 3. If the Turkish Tax Authorities accept the proposal made by the sub-custodians, then non-resident institutional investors will continue to benefit from an exemption at source based on their certificate of incorporation. Clearstream Banking will continue to monitor the situation and will provide additional information when it becomes available. 1. Clearstream Banking in this Announcement refers collectively to Clearstream Banking Frankfurt (CBF) and Clearstream Banking Luxembourg (CBL). CBF and CBL are Deutsche Börse Group companies. 2. The new tax regime covers equities purchased/debt securities issued on or after 1 January This does not apply to individual investors, who will continue to be required to provide a Certificate of Residence. 11 December 2006 A162 (1)

12 Impact on customers Unless and until otherwise instructed, in order to continue to benefit from an exemption at source from 1 January 2007, a Certificate of Residence must be received by Clearstream Banking for each account in which the customer holds Turkish securities subject to the new tax regime. In order to guarantee that no tax will be withheld, each Certificate of Residence must be signed and stamped by the beneficial owner s local tax authority on or after 1 January 2007 and received by Clearstream Banking not later than 1 February Submission of the Certificate of Residence Investors that acquire securities subject to the new regime during 2007 and want to benefit from a favourable rate but are unable to submit their Certificate of Residence by the above-mentioned deadline are requested to send a Certificate of Residence as follows: As soon as the trade is done; or Before the first coupon payment takes place after the purchase; or Before the securities are sold to a third party. To help customers to prepare an appropriate Certificate of Residence for beneficial owners, a suggested version is provided in Appendix 1 on page 4. An original of each completed Certificate of Residence, together with an accompanying letter indicating the customer s account number and the beneficial owner s Tax ID, must be sent to the following address: Clearstream Banking Attn: OTL Department 42, avenue JF Kennedy L-1855 Luxembourg Each Certificate of Residence will be forwarded to a translation agency appointed by Türkiye Is Bankasi. Translation fees may vary between TRY 50 and TRY 300 per page and will be debited to the respective customer s account. Any Certificate of Residence submitted by a non-resident investor to Clearstream Banking dated 2006 will remain valid until 31 March If the customer has submitted an original Certificate of Residence to a local depository other than Türkiye Is Bankasi, it will be sufficient for Clearstream Banking to receive a copy of it plus a Certificate of Residence (COR) number allocated by the Turkish Tax Authorities. Furthermore: The Tax ID of the beneficial owner that provides the certificate must be the same as the Tax ID recorded in Clearstream Banking; and The certificate must be accompanied by a cover letter quoting the customer s account number and the beneficial owner s Tax ID. Note: If a Certificate of Residence is not received and acknowledged as valid before an interest payment date or the sale of the securities, a withholding tax of 10% will be applied. This tax cannot be reclaimed through Clearstream Banking. Note on requesting a new Tax ID Beneficial owners requesting a new Turkish Tax ID are encouraged to submit a Certificate of Residence with their application. However, a Tax ID can be allocated without a Certificate of Residence but it should be noted that the beneficial owner will in these circumstances be subject to Turkish taxation. For additional information on the allocation of new Turkish Tax IDs, please refer to Announcement A035 dated 10 March December 2006 A162 (2)

13 Restricted application of trade price in OTC transactions For over-the-counter (OTC) transactions, the trade price given by the investor should be within +/-10% of the weighted average price of the day before the securities are delivered. Otherwise, the weighted average price of the day before the securities are delivered will be considered as the trade price. Further information The Customer Tax Guide (Turkey) on the Clearstream Banking web site ( under Publications & Downloads / Tax Information will be updated to reflect these changes in due course. For further information, please contact the Clearstream Banking Tax Help Desk on: Luxembourg Frankfurt tax@clearstream.com tax@clearstream.com Telephone: (0) Fax: (0) or Clearstream Banking Customer Service or your Relationship Officer. For more general information regarding Clearstream Banking products and services, please visit the Clearstream Banking web site at 11 December 2006 A162 (3)

14 Appendix 1. Certificate of Residence - example Note: Depending on the tax authority issuing the certificate of residence, the wording in the certificate may differ. [Letterhead of the beneficial owner s tax authorities] Date: insert date Attention: beneficial owner s full name and address Subject: Certificate of Residence Dear Sir/Madam: We confirm that beneficial owner s full name, Tax ID number beneficial owner s tax id number, is resident in beneficial owner s country of residence for taxation purposes and that, to the best of our knowledge and information, the above information is correct. Yours faithfully, Competent authorities date and stamp 11 December 2006 A162 (4)

15 Announcement Tax A December 2006 Turkey: Urgent request to holders of Tax IDs issued before 1 January 2006 Further to the announcements A095 dated 10 July 2006 and A162 dated 11 December 2006, Clearstream Banking 1 urgently advises all customers trading with a Turkish Tax ID issued before 1 January 2006 to note the following: On 7 July 2006, the withholding tax on interest payments and capital gains tax was reduced from 15% to 0% for all non-resident investors. The exemption was based on the certificate of incorporation 2 (for legal entities) or certificate of residence (for individuals) submitted by the non-resident investors. These documents were submitted by any new investor requesting a Tax ID in 2006, but not necessarily by old Tax ID holders (those who obtained their Tax ID before 1 January 2006). Without a proof of the investor's non-residence status, the standard tax rate of 10% is applicable. Urgent action to be taken Investors who have sold Turkish securities that fall under the new tax regime after 7 July 2006 and who have not yet submitted a certificate of incorporation or certificate of residence are strongly urged to do so before the end of the year to avoid being subjected to 10% capital gains tax or withholding tax on any interest payment received. Please forward the documentation by fax to and the original to Clearstream Banking Att. OTL Tax Services - Turkish Tax 42, avenue J.F. Kennedy L-2967 Luxembourg The documentation must be accompanied by a cover letter quoting the customer s account number and the beneficial owner s Tax ID. Further information For further information, please contact the Clearstream Banking Tax Help Desk on: Luxembourg Frankfurt tax@clearstream.com tax@clearstream.com Telephone: (0) Fax: (0) or Clearstream Banking Customer Service or your Relationship Officer. For more general information regarding Clearstream Banking products and services, please visit the Clearstream Banking web site at 1. Clearstream Banking in this Announcement refers collectively to Clearstream Banking Frankfurt (CBF) and Clearstream Banking Luxembourg (CBL). CBF and CBL are Deutsche Börse Group companies. 2. A certificate of residence is required after 1 January 2007, as published in A162 on 11 December December 2006 A172 (1)

16 Announcement Tax A March 2007 Turkey: Clarification of the Certificate of Residence requirement Note: This revised version supersedes the version published on 14 March 2007 and amends the description of benefit at source on dividend payments under the new tax regime. Clearstream Banking 1 is pleased to inform customers that the details of the requirement, issued by the Turkish Ministry of Finance in revised Communiqué 258 and effective 1 January 2007, to provide a Certificate of Residence have been clarified in Communiqué 263, as published in the Official Gazette. The Turkish Tax Authorities have lifted the requirement for a Certificate of Residence in the case of non-resident corporate investors 2 so that they can continue, under the new tax regime, to benefit from tax exemption for capital gains/interest income on equities purchased/debt securities issued after 1 January 2006 without having to submit a Certificate of Residence. However, for non-resident corporate investors to obtain relief at source on dividend payments, the Certificate of Residence may still be relevant (see Dividend payments under the new tax regime on page 2). Impact on customers Capital gains and interest income under the new tax regime Under the new tax regime, non-resident corporate investors will continue to enjoy an exemption from taxation on capital gains and interest income. This is based on the Certificate of Incorporation (or Articles of Association) submitted by the investor, either at the time of the request for the Turkish Tax ID or (subsequently) before the first interest payment or the sale/transfer of the relevant securities. Note: Non-resident individual investors will continue to be required to provide an annual Certificate of Residence to benefit from the domestic tax exemption. 1. Investors with a Turkish Tax ID obtained after 1 January 2006 Since 1 January 2006, Turkish Tax IDs are allocated only if a Certificate of Incorporation (or Articles of Association) is submitted with the application. Investors with a new Turkish Tax ID will therefore be exempt from capital gains tax and interest income under the new tax regime, unless advised otherwise. 2. Investors with a Turkish Tax ID obtained before 1 January 2006 Before 1 January 2006, investors applying for a Turkish Tax ID were not required to provide Clearstream Banking s Tax Department with a Certificate of Incorporation (or Articles of Association). Investors that have not subsequently submitted this document are requested to do so: As soon as the trade is done; or Before the first coupon payment takes place after the purchase; or Before the securities are sold to a third party. In the absence of the appropriate certification, tax will be withheld at the standard withholding tax rate of 10% and cannot be reclaimed through Clearstream Banking. 1. Clearstream Banking in this Announcement refers collectively to Clearstream Banking Frankfurt (CBF) and Clearstream Banking Luxembourg (CBL). CBF and CBL are Deutsche Börse Group companies. 2. This does not apply to individual investors, who will continue to be required to provide a Certificate of Residence. 4 April 2007 A061-rev (1)

17 Dividend payments under the new tax regime Dividends are normally subject to the standard withholding tax rate of 15% 1. Relief at source is available to investors that qualify for the benefit of a reduced rate of withholding tax in accordance with a Double Taxation Treaty (DTT) between its country of residence and Turkey 2. The maximum rate of withholding tax is defined in the relevant DTT (see Appendix 1 on page 3). In order to benefit at source from a DTT rate lower than 15%, eligible non-resident investors (that is, including non-resident corporate investors) are required to provide a Certificate of Residence, which remains valid as follows: For corporate investors, for three years; and For individual investors, for one year. Submission of the relevant documentation Customers are requested to submit documentation to Clearstream Banking, before the respective deadlines, as follows: A copy of the Certificate of Incorporation (or Articles of Association); and/or An original Certificate of Residence 3 ; and An covering letter indicating the customer s account number and the investor s Turkish Tax ID. The documentation should be sent by fax to and subsequently by courier to: Clearstream Banking Attn: OTL Tax Services - Turkish Tax 42, avenue JF Kennedy L-1855 Luxembourg Clearstream Banking must receive the relevant documentation at the latest two weeks before the dividend/interest payment or the sale/transfer of the relevant securities. Each Certificate of Incorporation and Certificate of Residence will be forwarded to a translation agency appointed by Clearstream Banking s depository Türkiye Is Bankasi. Translation fees may vary between TRY 50 and TRY 300 per page and will be debited to the respective customer s account. In the absence of the appropriate certification, tax will be withheld at the standard withholding tax rate and cannot be reclaimed through Clearstream Banking. Note: If the investor s name or status changes, the customer is requested to provide Clearstream Banking s Tax Department with an official document certifying the change so that Türkiye Is Bankasi can request a name change for the Tax ID holder with the Turkish Tax Authorities. Further information For further information, please contact the Clearstream Banking Tax Help Desk on: Luxembourg Frankfurt tax@clearstream.com tax@clearstream.com Telephone: (0) Fax: (0) or Clearstream Banking Customer Service or your Relationship Officer. For more general information regarding Clearstream Banking products and services, please visit the Clearstream Banking web site at 1. Issuers may make dividend payments that are subject to a rate lower than 15%. 2. Most DTTs provide for a tax rate equal to or greater than the standard withholding tax rate. 3. If the customer submitted an original Certificate of Residence to a local depository other than Türkiye Is Bankasi, Clearstream Banking need only receive a copy of it plus a Certificate of Residence (COR) number allocated by the Turkish Tax Authorities. 4 April 2007 A061-rev (2)

18 Appendix 1. Equities - Double Taxation Treaties concluded by Turkey and currently in force ( Country Rate prescribed by the DTT - (%) Country Rate prescribed by the DTT - (%) Country Rate prescribed by the DTT - (%) The standard rate of withholding tax on dividends is currently 15%. Albania 15 Israel 10 Russia 10 Algeria 12 Italy 15 Singapore 15 Austria 35 Japan 15 Slovakia 10 Bangladesh 10 Jordan 15 Slovenia 10 Belarus 15 Kazakhstan 10 South Africa 15 Belgium 20 Kuwait 10 South Korea 20 Bulgaria 15 Kyrgyzstan 10 Spain 15 Czech Republic 10 Latvia 10 Sudan 10 China 10 Lebanon 15 Sweden 20 Croatia 10 Lithuania 10 Syria 10 Denmark 20 Luxembourg 20 Tajikistan 10 Egypt 15 Macedonia 10 Thailand 15 Estonia 10 Malaysia 15 Tunisia 15 Finland 20 Moldova 15 Turkmenistan 10 France 20 Mongolia 10 Ukraine 15 Germany 20 Morocco 10 UAE 12 Greece 15 Netherlands 20 UK 20 Hungary 15 Norway 30 U.S.A. 20 India 15 Pakistan 15 Uzbekistan 10 Indonesia 15 Poland 15 Iran 20 Romania March 2007 A061 (3)

19 Announcement Tax A138 6 August 2007 Turkey: Liquidity Bills - a new instrument issued by the Central Bank Clearstream Banking 1 is pleased to inform customers that, effective immediately Liquidity Bills, a new instrument issued by the Central Bank of Turkey, are now eligible for settlement and custody in Clearstream Banking. Note: For details of Liquidity Bills, please refer to the Clearstream Banking Market Profile (Turkey). The standard rates of taxation of these securities are as follows: Withholding tax on interest: 10% Capital gains tax: 10% Exemption at source Exemption at source from both of these income taxes is available to beneficial owners that are nonresidents of Turkey upon submission of the following documentation before maturity of the bill: For individuals: a Certificate of Residence; For legal entities: a Certificate of Incorporation. 2 The documentation should be received in Clearstream Banking before the sale or transfer of the securities and at the latest by 10:00 CET 15 business days before coupon payment/redemption date. Customers are reminded that both certificates must be translated into Turkish, either by the Turkish Consulate in the beneficial owner s country of residence or by a translation agency appointed by Clearstream Banking s local depository in Turkey. The appointed agency offers translation facilities in several languages. Should a language not be available, the certificate should first be translated into English by an authorised translation agency in the beneficial owner s country of residence and this will be submitted for final translation in Turkey. Note: Reclaim of withholding tax on interest and capital gains tax is not available through Clearstream Banking. Further information For further information, please contact the Clearstream Banking Tax Help Desk on: Luxembourg Frankfurt tax@clearstream.com tax@clearstream.com Telephone: (0) Fax: (0) or Clearstream Banking Customer Service or your Relationship Officer. For more general information regarding Clearstream Banking products and services, please visit the Clearstream Banking web site at 1. Clearstream Banking in this Announcement refers collectively to Clearstream Banking Frankfurt (CBF) and Clearstream Banking Luxembourg (CBL). CBF and CBL are Deutsche Börse Group companies. 2. For legal entities that submitted a Certificate of Incorporation as part of their original request for allocation of a Turkish Tax ID, exemption at source is automatic without the need for the submission of further documentation. 6 August 2007 A138 (1)

20 Announcement Tax A January 2010 Turkey: Update on the reintroduction of capital gains tax for non-resident investors Further to Taxflash T09043 dated 20 October 2009, the Constitutional Court's decision to cancel the current exemption from capital gains tax for non-resident investors was published in the Official Gazette on 8 January The effective date for the reintroduction of capital gains tax is 8 October Non-resident investors will continue to benefit from an exemption from capital gains tax under the new tax regime until the effective date. Customer documentation will be updated in due course. For further information, on how the capital gains tax was calculated and processed before the current exemption was introduced on 7 July 2006, please refer to customer announcements published at the end of 2005 and the first half of Note: If the Ministry of Finance decides to amend the law to ensure that the current tax exemption continues to apply, we will inform you accordingly. Further information For further information, please contact the Clearstream Banking Tax Help Desk on: Luxembourg Frankfurt tax@clearstream.com tax@clearstream.com Telephone: (0) Fax: (0) or Clearstream Banking Customer Service or your Relationship Officer. For more general information regarding our products and services, please visit As a registered customer, subscribe to our free alerts service to receive immediate, daily and/or weekly notification of the latest customer publications on our web site. Unsubscribe at any time; we respect your privacy. 22 January 2010 A10015 (1)

21 Announcement Tax A September 2010 Turkey: New tax legislation effective 1 October 2010 Further to our earlier publications 1 concerning Income Tax Law Number 6009, we would like to inform you that the Turkish Council of Ministers is expected to issue a decree this week that will amend the withholding tax rates and redefine the current tax legislation. The new tax legislation will affect the following: Capital gains on equities; Capital gains on bonds; Coupons (interest) on bonds. The new tax legislation will apply for bonds issued after 1 January 2006 and for equities purchased after 1 January N.B.: Impact on customers Dividends on equities are not affected by the new legislation and the current tax procedure remains unchanged. The table below shows the withholding tax rates (%) for the respective investor types applicable under the current legislation and under the new legislation with and without issue of the expected decree. Resident investors Individuals Capital Investment corporates funds Non-resident investors Others Individuals Capital Investment corporates funds Current legislation Equities - capital gains Bonds - coupon Bonds - capital gains Others New legislation from 1 October if the decree IS issued Equities - capital gains Bonds - coupon Bonds - capital gains New legislation from 1 October if the decree IS NOT issued Equities - capital gains Bonds - coupon Bonds - capital gains It is the clear expectation of the market that a decree will be issued in order to align the current tax rates with discrimination between resident and non-resident investors. If a decree is issued only after the effective date, then it is expected that the tax rates with the decree will be applicable retroactively with effective date still being 1 October The status of existing beneficial owners will automatically be reviewed by Is Bankasi, our depository in Turkey, and, if a beneficial owner is no longer eligible for a 0% rate of withholding tax under the new tax legislation, its status will be changed accordingly. 1. Clearstream Banking Luxembourg Announcement A10015, dated 22 January 2010, and Taxflash T10014, dated 11 August September 2010 A10157 (1)

22 Our current tax procedure concerning relief at source, documentation requirements, deadlines etc. remains unchanged, as described in the Market Taxation Guide - Turkey. We continue to monitor developments closely and will provide you with further updates as soon as information becomes available. Further information For further information, please contact the Clearstream Banking Luxembourg Tax Help Desk on: Luxembourg Frankfurt tax@clearstream.com tax@clearstream.com Telephone: (0) Fax: (0) or Clearstream Banking Luxembourg Customer Service or your Relationship Officer. For more general information regarding our products and services, please visit As a registered customer, subscribe to our free alerts service to receive immediate, daily and/or weekly notification of the latest customer publications on our web site. Unsubscribe at any time; we respect your privacy. 29 September 2010 A10157 (2)

23 Announcement Tax A December 2010 Turkey: Non-resident investment funds eligible for tax exemption Background Further to our earlier publications 1 concerning Income Tax Law Number 6009, we hereby inform you that Communiqué No 277 has been published in the official gazette dated 27 December 2010 outlining the criteria for determining whether an institution is to be considered similar to a Turkish investment fund and therefore eligible for full exemption from withholding tax. According to Income Tax Law Number 6009, effective as of 1 October 2010, capital gains and interest derived from bonds will, for investors of the following types and provided that they fulfil certain defined conditions, be subject to 0% withholding tax: Turkish resident corporations (joint stock companies, limited liability companies and commandite companies whose capital is divided into shares); Non-resident corporations with the same characteristics as Turkish resident corporations; Turkish regulated investment funds established in line with the Capital Markets Law; Non-resident investment funds with the same characteristics as Turkish investment funds. Impact on customers According to Communiqué No 277, all non-resident institutional portfolio investors will be considered similar to a Turkish investment fund and therefore eligible for full tax exemption, such as: Limited Liability partnerships; Sovereign funds; Corporate and institution funds; Investment institutions. However, such entities will only be considered eligible on condition that they: are engaged solely in investing in securities and other capital market instruments in Turkey as their only business in Turkey, to derive income and capital gains from these instruments and to exert the rights attached to these instruments. In this regard, Communiqué No 277 states two conditions, both of which must apply simultaneously: The sole activity of the non-resident investor in Turkey should be investment in securities and other capital market instruments. The investor should be an institutional portfolio investor. Communiqué No 277 does not state any criteria whereby a non-resident corporation can be considered similar to a Turkish resident corporation and therefore eligible for full tax exemption. However, sources indicate that foreign companies with a legal personality that offer their shareholders limited liability in proportion to their equity in the company should be deemed similar to Turkish capital companies and benefit from the 0% withholding tax rate. It is also now definite that the withholding tax rate to be applied to individuals and other entities who are not eligible to benefit from 0% withholding tax will be 10%. 1. Clearstream Banking Luxembourg Announcement A10015, dated 22 January 2010, Taxflash T10014, dated 11 August 2010 and Announcement A10157, dated 29 September December 2010 A10232 (1)