Tax Law

Tax Law in Turkey

A brief information about Tax Law in Turkey

In Turkey, the regulation of tax litigation between taxpayers and the government are set forth in a series of detailed legislations.

The principal legislations regarding tax litigation in Turkey as follows:

•          Code of Administrative Procedure No. 2577.

•          Code on the Establishment and Duties of Regional Administrative Courts, Administrative Courts and Tax Courts No. 2576.

•          Code on the Council of State No. 2575.

•          Code on the Collection Procedure of Assets No. 6183, which regulates the collection procedure of public receivables involving tax claims.

•          Tax Procedural Code No. 213

When a conflict or dispute arises between these parties, taxpayers may be subject to either or both:

•          Administrative fines and/or tax penalties

•          Imprisonment, in rare cases.

 Disputes that are exclusively tax-related are under the jurisdiction of Turkey's specialised Tax Courts.

 However, Criminal Courts with general jurisdiction hear tax disputes involving criminal law offences (for example, tax evasion).

 Currently, tax litigation in Turkey arises generally from distribution of camouflage of earnings through transfer pricing. In addition, there are numerous clasus tax evasion cases before Criminal Courts on the grounds that commercial books and records are camouflaged. 

What is Tax Evasion?: 

Tax evasion is set forth as a crime in Article 359 of the Tax Procedural Code No. 213, as:

•          False accounting in commercial books.

•          Inaccurate identification of transactions in commercial books.

•          Covering commercial books and records.

•          Suppressing commercial books and records.

According to Tax Procedural Code, in the case of false accounting, concealment of commercial books or improper and inaccurate identification of transactions in commercial books, offenders can be subject to imprisonment for between 18 months and three years. In  case of suppression of books and records, an offender will be sentenced to imprisonment for between three and five years.

Tax Assessments:

Throughout the taxation process, taxpayers are in contact with the Tax Administration which is responsible for every single phases of taxation process. This includes the levying and collection of tax, as well as representing the government during tax disputes. The Tax Administration also audits taxpayers to determine if they are meeting their tax obligations and paying the correct amounts.

 The Tax Administration conducts an audit and reports its results to the audited party. Tax assessments and fines can be only initiated by the Tax Administration. Therefore, the taxpayer must be notified following the audit.

 At the end of an audit, the Tax Administration can impose an administrative fine on taxpayers that have failed to perform their tax obligations or acted contrary to the Tax Procedure Code No. 213

 If the Tax Administration determines that a taxpayer has under-declared tax and failed to pay the full amount, it will apply a penalty based on the remaining unpaid tax amount

 Tax re-assessment:

Taxpayers can request the Tax Administration to review its decision according to Article 10, Code of Administrative Procedure No. 2577. This request must be made within the 30-days period which is set for filing a lawsuit. The relevant administration must respond to this request within 60 days. In case a taxpayer makes a revision request, the 30-day period for initiating a lawsuit will be suspended automatically on the date the request is made. If the administration does not respond within 60 days, the request is deemed to be rejected. In such a case, the period for filing a lawsuit will continue to run for the remaining time from the date of refusal.

If the time lapse for filing a lawsuit expires, taxpayers can still take make a request to the Tax Administration. If the Tax Administration refuses a taxpayer's request, the taxpayer can then make an appeal to the Ministry of Finance. Refusal by the Ministry of Finance can be challenged before the Courts.

Customs Duties:

Disputes involving customs duties are subject to a separate procedure. Article 242 of the Customs Code No. 4458 specifically regulates the Customs Administration's auditing operations. After receiving a notification, taxpayers must take their requests to the relevant customs authority for objections to customs duties, penalties and administrative decisions. These objections must be made within 15 days of receiving the notification. If the taxpayer's petition is rejected, it is still possible to dispute the refusal before local courts. This is a mandatory procedure and must be completed before the taxpayer can apply for additional judicial remedies. After a taxpayer has exhausted this procedure, it can file a lawsuit against the Custom Administration's findings or fines.

Duman Law & Consultancy provides daily reports on recent changes in tax legislation to their clients and offer counseling services to reduce the risk of tax disputes beforehand. In this context, we provide consultancy and litigation services that our clients need for tax law.

How may we help you?

Preemptive Measures

 We determine the problems that may arise from  the tax audit of the Ministry of Finance, by reviewing the company records and books from a legal aspect, and provide legal consultancy services to determine the taxes accrued by mistake.

 Dispute Resolution

 We represent our clients in the proceedings related to disputes about income tax, value added tax, corporate tax, motor vehicle tax, real estate tax and all other tax types. Within this scope, Duman Law & Consultancy has been representing clients for the cases related to tax loss, irregularity fines, tax penalties, customs duties, tax re-assessment process in addition to evasion of tax offenses.

 Applications for Correction and Complaints

 Our team provides legal support to our clients in the process of the filing applications of tax correction against the unlawful tax practices, and filing complaint applications against the Ministry of Finance against the decisions of the tax offices. Following to these procedures, we represent our clients before he Tax Courts for their disputes against the determinations of Turkish tax authorities and tax offices.