The Turkish Tax System

February 23, 2022

Tax is the economic values that the state or other public organizations authorized by it receive gratuitously from natural and legal persons in accordance with certain rules, in accordance with legal algebra, in order to perform the tasks assigned to it, according to certain rules. Each element included in this definition refers to a separate feature/nature of the tax. In this context, the tax;

• It is received by a legitimate authority with the power of taxation,

• Vebren is taken; it is a crime to not pay taxes or violate tax laws in various ways, and those who commit this crime are sanctioned within the framework of the law,

• It is taken according to certain rules, away from arbitrariness; legal limits on tax are drawn up through the constitution, laws, and other legal savings, this is called the principle of legality.

The financial goal of taxation constitutes the traditional goal on which both classical and modern economists have both ideas. Undoubtedly, the main purpose of the tax is to obtain the income needed by the state to cover public expenditures. Then the main function of taxation is to finance public expenses.

Today, ensuring fairness in the distribution of income is one of the most basic objectives of taxation. A distribution of income and wealth that occurs according to the rules of the market economy is not always fair. For this, the state must intervene in the market in order to eliminate injustices in the distribution of income and wealth.

General Structure of the Turkish Tax System

When we look at the Turkish tax system in general, it is seen that income, expenditure, and wealth elements are subject to tax. As we have already mentioned, taxes on income and wealth are direct, and taxes on expenses are included in the group of indirect taxes. While indirect taxes constitute about 70% of total tax revenues in Turkey, it is seen that 30% of tax revenue is derived from direct taxes.

When we divide the taxes that make up the Turkish tax system into three groups income, expenditure, and wealth taxes, it is possible to classify the basic taxes contained in the system as follows;

I- Taxes on Income

  • Income tax
  • Corporate income tax

II- Taxes on Expenses

  • Value added tax
  • Special consumption tax
  • Tax on bank and insurance transactions
  • Special communication tax
  • Games of chance tax
  • Stamp duty
  • Customs duty
  • Municipal taxes

II- Taxes on Wealth

  • Inheritance and transfer tax
  • Property tax
  • Motor vehicle tax

Income Tax

Income Tax Code income is defined as “the net amount of earnings and income of a natural person in a calendar year” and lists individually what are the elements of taxable income. Accordingly, the following earnings and expenses are recognized as income and are taxed;

  • Commercial Earnings,
  • Agricultural Earnings,
  • Fees,
  • Self-Employed Earnings,
  • Real Estate Capital Loans, – Securities Capital Loans,
  • Other Earnings and Expenses.

Corporate Income Tax

The subject of corporate tax is the earnings of corporations. Corporate income consists of income elements that fall under the subject of income tax. In other words, income elements are subject to income tax if they are obtained by natural persons, while corporate tax is levied if the same incomes are obtained by an institution.

Value Added Tax

Value-added tax is a tax that is ultimately paid by consumers. The entire amount of tax originally paid by manufacturers and sellers has reflected the consumer at the final stage. Producers and sellers who have received the name of legal taxpayers; compensate the tax they pay on their purchases with the taxes they collect on their sales; deposit the excess tax to the tax office. These people, in a sense, serve as collectors. The final consumers, who constitute the last ring of the reflection mechanism, are the actual taxpayers of the value-added tax.

Special Consumption Tax

Private consumption tax does not have the nature of a spread consumption tax, as in the case of value-added tax. It is not received on all goods, but only on certain goods specified in the law in the form of four lists. Services are not included in the subject of the tax.

The Subject of the Tax on Bank and Insurance Transactions

The subject of the tax is “all transactions that banks and insurance companies have made in exchange for money”, regardless of what form and under what name. It is possible to call these and similar transactions bank and insurance services in general. For example, a money transfer required by a bank, asking if there is a cheque provision, issuing a letter of guarantee, collecting a cheque or promissory note on behalf of the customer are considered banking transactions.

Motor Vehicle Tax

Motor vehicle tax, which is one of the wealth taxes in the Turkish Tax System, is a special wealth tax due to the fact that it covers not all the elements of wealth, but only the motor vehicles listed in the law.

Special Communication Tax

It is a type of tax levied on elements such as mobile phones, radio, and TV broadcasts. In order to maintain these taxable elements in the best way, taxes are charged.

Customs Duty

It is the type of tax required for products arriving at the country’s border. Payment of taxes is carried out with the registration of customs declaration of free movement of products and transactions that lead to the occurrence of tax.

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