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Basic e-ledger and e-invoice 14-year implementation of
matters in tax audits withholding on free (FX) funds is
changing
Many companies have been included in the scope of
e-ledger, e-invoice and e-archive Invoice through the
communiques issued in the last few years and this number The withholding rate on portfolio management gains of
will be increasing in the upcoming years. The Revenue free (FX) funds that are exempted from corporate tax, has
Administration is including more companies and/or sectors been increased from 0 percent to 15 percent through the
with new communiques. Presidential Decision no.2604 published in the Official
Gazette dated 3 June 2020.
Revenue Administration has also issued new communiques
in order to access data in digital environment without There are no amendments to the withholding tax of 10
any problem. Companies now have to keep the secondary percent on the income obtained by individual investors
backups of their e-ledger files in their integrator systems from mutual fund participation certificates (excluding
and the Revenue Administration can access these backups certain exceptional cases). Therefore, in addition to
when deemed necessary and e-invoices are already passing the 10% withholding tax on the income obtained from
through the systems of Revenue Administration. the participation certificates of free (FX) funds, a 15%
withholding tax will be required on the gains of these funds
Definitely, the aim here is to make audits faster and in a arising from portfolio management. The Decision has been
digital environment. The Tax Inspection Board had already enacted on the date of publication (3 June 2020) and it does
been using data in electronic environment for a long time not contain any other statement about the effective date.
during audits or when identifying risks. As the type and
amount of data collected increases, the variety and efficiency
of digital methods to be used in audits will inevitably However, in the announcement released on the website
increase. We can even understand from the questions sent to of the Revenue Administration, it is indicated that the
our Tax Technologies and Transformation Department that aforementioned Decision has been enacted as of its
diversity and efficiency has just started to increase. publication date and that the withholding tax will be made
at the new rate determined on the income to be obtained
In the simplest way, without the requirement for on-site from the gains of free (FX) funds arising from portfolio
inspection, it is determined which of the invoices issued is management from this date.
printed and which is e-invoice and invitations for explanation
are sent to companies for invoices that are not in the From this statement made by the Revenue Administration,
appropriate format. During the audits, relevant e-ledgers and it is concluded that for the 2020 fiscal period, a withholding
e-invoices are requested from the companies and the validity tax of 15% should be paid on the gains of these funds arising
of these files is checked first. Unfortunately, many companies from portfolio management between 03.06.2020 and
have problems with this first basic step before the content 31.12.2020 and a 0% withholding tax should be paid on the
and tax calculations in e-invoice and e-ledger. gains obtained prior to 03.06.2020.

Possible problems to be encountered Summarized from the article published in the "Institutional
Investor" magazine.
• e-Invoices that are not reaching to the recipient
• e-Invoices that are not reaching to the recipient
• e-Invoices recorded with only PDF printout
• Format and signature problems in e-invoice files
• Format and signature problems in e-ledger and certificate
files
• Incompatibility between e-ledger and certificate files
What to do

In fact, if the errors and problems encountered are detected
at early stage, their solutions are so simple. However, many
errors are unfortunately noticed after month (s) or year (s)
have passed and usually emerge during audits. Of course,
solutions may differ depending on the problem or error, but
the following measures can be taken for all of them.
Explanations in this article reflect the writer's personal view on the
• Verification of files, matter. EY and/or Kuzey YMM ve Bağımsız Denetim A.Ş. disclaim any
responsibility in respect of the information and explanations in the
• Checking the contents, article. Please be advised to first receive professional assistance from
• Checking the processes. the related experts before initiating an application regarding a specific
matter, since the legislation is changed frequently and is open to different
interpretations.

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