CONTENTS

 

CHAPTER ONE

TAX LAW

 

Section One

INTRODUCTION TO TAX LAW

 

I. TAX LAW IN THE GENERAL CONTEXT OF LAW, ITS SUBJECT, BRANCHES AND DEFINITION     21

A. Tax Law in the General Context of Law.......................................... 21

B. Subject of Tax Law........................................................................ 21

II. SOURCES OF TAX LAW.................................................................... 22

A. Sources Issued by the Legislative Body........................................... 23

B. Sources Issued by the Executive Body.............................................. 25

C. Sources Arisen from the Judicial Body............................................ 29

D. Other Sources............................................................................... 30

III. IMPLEMENTATION OF TAX LAWS................................................. 30

A. Implementation of Tax Laws in terms of Time................................ 30

B. Implementation of Tax Laws in terms of Location.......................... 31

C. Implementation of Tax Laws in terms of Meaning (Interpretation in Tax Law)    32

 

Section Two

PARTIES OF TAXATION

 

I. TAXATION AUTHORITY.................................................................... 35

II. LIABLE PARTIES FOR TAXATION.................................................... 35

A. Taxpayer (liable)........................................................................... 35

B. The Party Responsible for Tax........................................................ 36

C. Tax Capacity................................................................................. 41

 

Section Three

TAXATION PROCESS

 

I. EVENTS GIVING RISE TO TAXATION................................................ 43

II. ASSESSMENT OF TAX..................................................................... 44

A. Description................................................................................... 44

B. Assessment Based on Declaration.................................................. 45

C. Unilateral (one-sided) Assessment by Tax Administration.............. 45

III. NOTIFICATION OF TAX.................................................................. 46

IV. ACCRUAL OF TAX........................................................................... 48

V.COLLECTION OF TAX........................................................................ 49

A. Notion of Collection....................................................................... 49

B. Payment Period.............................................................................. 49

C. Consequences of not Paying Taxes in Due Time............................... 50

 

Section Four

OBLIGATIONS OF TAXPAYERS AND PERIODS IN TAX LAW

 

I. OBLIGATIONS OF TAXPAYERS......................................................... 54

A. Obligation to Submit Declaration.................................................. 54

B. Obligation to Keep Books............................................................... 54

C. Obligation to Follow Document Format.......................................... 59

D. Obligations of Recording Entry...................................................... 62

E. Obligations Related to Vise of Books............................................... 63

F. Obligation to Preserve Documents.................................................. 63

G. Obligation to Submit Tax Return................................................... 63

H. Obligation for Valuation............................................................... 63

II. PERIODS IN TAX LAW..................................................................... 63

A. Classification of Periods................................................................ 64

B. Calculation of Periods.................................................................... 64

C. Extension of Periods....................................................................... 65

 

Section Five

TAX OFFENCES AND TAX PENALTIES

 

I. NOTIONS OF OFFENCE AND PENALTY............................................ 68

II. TAX OFFENCES AND TAX PENALTIES IN TURKEY.......................... 70

A. Irregularity Offences and Fines Applied......................................... 70

B. Special Irregularity Offences and Fines Applied............................. 72

C. Acts Leading to Tax Loss and Penalties Applied............................. 76

D. Acts Leading to Freedom Limiting and Their Punishments.............. 79

E. Payment Time of Tax Penalties, Situations in which the Penalties are Inapplicable, Rebate and Lapse of Time.............................................................................................. 80

 

Section Six

TAX ADMINISTRATION AND TAX AUDIT

 

I. TAX ADMINISTRATION.................................................................... 82

A. Administrative Organization......................................................... 82

B. Audit Units................................................................................... 82

C. Assessment Committees.................................................................. 83

II. TAX AUDIT...................................................................................... 83

A. Spot-Checks................................................................................... 83

B. Tax Examination............................................................................ 83

C. Tax Investigation........................................................................... 84

D. Information Collecting.................................................................. 84

 

Section Seven

THE REASONS CEASING OR MITIGATING TAX DEBT AND TAX PENALTY

 

I. PAYMENT......................................................................................... 85

II. PRESCRIPTION (LAPSE OF TIME).................................................... 85

A. Kinds of Prescription..................................................................... 85

B. Suspension and Interruption of Prescription.................................. 86

C. Juridical Consequences of Prescription........................................... 87

III. CONCILIATION.............................................................................. 87

A. Subject and Scope of Conciliation.................................................. 87

B. Conciliatory Circumstances............................................................ 87

C. Forms of Conciliation..................................................................... 88

D. Consequences of Conciliation......................................................... 88

E. Conciliation Committees................................................................. 89

F. Pre-Assessment Conciliation........................................................... 90


 

IV. CORRECTION REQUEST................................................................. 91

A. Definition of Tax Error.................................................................. 96

B. Types of Tax Errors........................................................................ 96

C. Correction of Tax Errors................................................................ 97

V. CANCELLATION............................................................................... 98

A. Cancellation due to Natural Disasters........................................... 99

B. Cancellation Due to Impossibility of Collection............................... 99

C. Renouncement of Accrual............................................................... 99

D. Cancellation by Judicial Order...................................................... 99

VI. POSTPONEMENT............................................................................ 99

VII. OFFSETTING............................................................................... 100

VIII. DEATH....................................................................................... 100

IX. AMNESTY..................................................................................... 100

X. REPENTANCE................................................................................. 100

XI. REDUCTION IN PENALTIES.......................................................... 101

 

Section Eight

TAX DISPUTES AND METHODS OF RESOLUTION

 

I. ADMINISTRATIVE METHODS OF RESOLUTION OF TAX DISPUTES 102

II. JUDICIAL METHODS OF RESOLUTION OF TAX DISPUTES........... 103

A. Tax Judgment.............................................................................. 103

B. Fundamentals of Filing a Tax Lawsuit.......................................... 103

C. Competent Courts and Legal Actions............................................ 104

D. Extraordinary Legal Actions........................................................ 108

 

CHAPTER TWO

TURKISH TAX SYSTEM

 

Section One

TURKISH TAX SYSTEM

 

I. INTRODUCTION............................................................................. 113


 

Section Two

PERSONAL INCOME TAX

 

I. INCOME TAX.................................................................................. 115

A. Concept of Income....................................................................... 115

B. Types of Income Tax..................................................................... 116

II. INCOME IN PERSONAL INCOME TAX LAW................................... 117

III. SUBJECT AND LIABLE PERSON IN PERSONAL INCOME TAX...... 117

IV. FEATURES OF INCOME IN PERSONAL INCOME TAX................... 118

A. Subject of tax shall be composed of the incomes of real persons... 118

B. Personal income tax shall be applied to the incomes obtained in a calendar year           118

C. Income is a concept that takes all incomes of a real person into consideration   119

D. Income shall have been obtained................................................. 119

E. Income shall be determined on real basis..................................... 120

F. Income shall be considered as net amount.................................... 120

V. LIABILITY IN PERSONAL INCOME TAX......................................... 121

A. Full Tax Liability......................................................................... 121

B. Limited Tax Liability.................................................................... 123

VI. EXEMPTIONS AND EXCLUSIONS IN PERSONAL INCOME TAX.... 124

A. Exemptions.................................................................................. 124

B. Exclusions.................................................................................... 126

 

Section Three

ELEMENTS OF PERSONAL INCOME TAX AND DETERMINATION OF TAX BASE

 

I. COMMERCIAL INCOME................................................................. 135

A. Concept of Commercial Income..................................................... 135

B. Scope of Commercial Income........................................................ 136

C. Features of Commercial Activity................................................... 137

D. Status of Partners’ Incomes with Respect to Commercial Income... 139

E. Methods for Determination of Commercial Income........................ 141

F. Deductible and Non-deductible Expenses in Determination of Commercial Income          155

G. Taxation of Construction and Repair Works Over (Extending to) Years    158

H. Exemptions and Exclusions in Commercial Income........................ 164

II. AGRICULTURAL INCOME.............................................................. 166

A. Concepts of Agricultural Enterprise, Farmer and Crop................. 167

B. Taxation of Agricultural Income.................................................. 167

III. WAGES AND SALARIES................................................................ 174

A. Definition of Wages and Salaries................................................. 174

B. Definition of Employer................................................................. 175

C. Real Net Value of Wages and Salaries.......................................... 175

D. Other Wages and Salaries........................................................... 176

E. Taxation of Wages and Salaries................................................... 177

F. Exemptions and Exclusions in Wages and Salaries........................ 177

G. Minimum Subsistence (Personal) Allowance for Wage and Salary Earners          183

IV. SELF EMPLOYMENT INCOME...................................................... 185

A. Self-employed Person................................................................... 185

B. Determination of Self-employment Income.................................... 186

C. Professional Expenses in Determination of Self-employment Income 187

D. Exclusions in Self-employment Income.......................................... 188

V. REVENUES FROM IMMOVABLE PROPERTIES............................... 189

A. Determination of Net Revenue in Revenues from Immovable Properties   190

B. Gross Revenue in Revenues from Immovable Properties................. 190

C. Principle of Imputed Rent Value in Revenues from Immovable Properties 191

D. Deductible Expenses in Revenues from Immovable Properties....... 192

E. Exclusion Amount in Revenues from Immovable Properties............ 193

F. Cases related to Taxation of Revenues from Immovable Properties 194

VI. REVENUES FROM MOVABLE PROPERTIES.................................. 197

A. Cases where Revenues shall not be considered as Revenues from Movable Properties      199

B. Exclusions in Revenues from Movable Properties........................... 199

C. Determination of Net Revenue in Revenues from Movable Properties 200

D. Declaration of Revenues from Movable Properties with Annual Tax Return        200

VII. OTHER INCOMES AND REVENUES............................................. 205

A. Appreciation Gains...................................................................... 205

B. Incidental Incomes....................................................................... 208

 

Section Four

ASSESSMENT AND COLLECTION PROCESSES IN PERSONAL INCOME TAX

 

I. DECLARATION OF INCOME AND TYPES OF TAX RETURNS........... 210

A. Declaration Principle................................................................... 210

B. Types of Tax Returns in Personal Income Tax............................... 217

II. ASSESSMENT AND PAYMENT OF PERSONAL INCOME TAX......... 224

A. Assessment of Personal Income Tax.............................................. 224

B. Advance Tax................................................................................ 225

C. Offsets in Personal Income Tax.................................................... 228

D. Payment of Personal Income Tax.................................................. 231

E. Cases related to Personal Income Tax........................................... 232

 

Section Five

CORPORATE INCOME TAX

 

I. SUBJECT AND TAXPAYERS............................................................. 236

A. The Subject of Corporate Income Tax........................................... 236

B. Corporate Income Taxpayers........................................................ 237

C. Types of Tax Liability in Corporate Income Tax............................ 239

II. EXEMPTIONS AND EXCLUSIONS.................................................. 240

A. Exemptions in Corporate Income Tax............................................ 240

B. Exclusions in Corporate Income Tax............................................. 242

III. DETERMINATION OF TAX BASE, DECLARATION AND PAYMENT FOR FULL TAXPAYER COMPANIES.................................................................................................... 250

A. Net Corporate Income.................................................................. 250

B. Deductible Expenses..................................................................... 252

C. Loss Offset................................................................................... 253

D. Other Deductions........................................................................ 255

E. Non-Deductible Expenses.............................................................. 257

F. Declaration of Corporate Income Tax........................................... 263

G. Tax Deduction (Stoppage) and Withholding Tax Return............... 264

H. Taxation Period and Assessment.................................................. 266

I. Payment of Tax and Payment Period.............................................. 266

IV. DETERMINATION OF TAX BASE, DECLARATION AND PAYMENT FOR LIMITED TAXPAYER COMPANIES..................................................................................................... 267

A. Net Corporate Income.................................................................. 267

B. Taxation Period and Declaration................................................. 269

C. Special Declaration...................................................................... 269

D. Assessment and Payment of Tax.................................................. 271

E. Tax Deduction (Stoppage) and Withholding Tax Return................ 271

V. CORPORATE INCOME TAX AND ADVANCE TAX RATES AND OFFSET OF PAID TAXES FOR LIMITED AND FULL TAXPAYER CORPORATIONS......................................... 275

A. Tax Rates of Corporate Income Tax and Advance Tax.................. 275

B. Offsetting Taxes Paid Abroad...................................................... 278

C. Offsetting Taxes Paid at Home Country........................................ 279

D. Cases Related to Corporate Income Tax........................................ 280

 

Section Six

VALUE ADDED TAX

 

I. SUBJECT OF TAX............................................................................ 284

A. Delivery and Occasions Considered as Delivery of Good............... 284

B. Service and Occasions Considered as Performance of Service........ 285

C. Conduct of Transactions in Turkey............................................... 286

D. Transactions Constituting the Subject of Tax............................... 286

II. TAXPAYER AND THE PARTY RESPONSIBLE FOR TAX................... 288

A. Taxpayer of Value Added Tax...................................................... 288

B. The Party Responsible for Value Added Tax.................................. 289

III. EVENTS GIVING RISE TO TAXATION........................................... 289

IV. EXCLUSIONS................................................................................ 290

A. Exclusion in Exportation.............................................................. 290

B. Exclusion in Vehicles, Precious Metals and Oil Prospecting Activities, National Security Expenditures and Investments................................................................................. 293

C. Exclusion in Transportation......................................................... 294

D. Diplomatic Exclusions.................................................................. 295

E. Importation Exclusion.................................................................. 295

F. Social and Military Exclusions and Other Exclusions..................... 295

V. RENOUNCEMENT FROM EXCLUSION AND LIMITS OF EXCLUSIONS 300

A. Renouncement from Exclusion...................................................... 300

B. Limits of Exclusions...................................................................... 301

VI. TAX BASE, TAX RATES AND DEDUCTION.................................... 301

A. Tax Base in Value Added Tax....................................................... 301

B. Elements Included and not Included in Tax Base.......................... 303

C. Value Added Tax Rates................................................................ 304

D. Tax Deduction............................................................................. 304

VII. METHODS OF TAXATION AND DECLARATION OF TAX.............. 307

A. Methods of Taxation.................................................................... 307

B. Period of Taxation....................................................................... 307

C. Declaration Principle................................................................... 307

D. Term to Submit Tax Return.......................................................... 308

VIII. ASSESSMENT PROCEEDINGS.................................................... 308

A. Place of Assessment..................................................................... 308

B. Addressee of Assessment.............................................................. 308

C. Time of Assessment...................................................................... 309

IX. PAYMENT OF TAX........................................................................ 309

X. VAT COLLECTED BY CUSTOMS ADMINISTRATION...................... 310

 

Section Seven

EXCISE DUTY (SPECIAL CONSUMPTION TAX)

 

I. SUBJECT OF TAX............................................................................ 311

II. EVENTS GIVING RISE TO TAXATION............................................. 312

III. TAXPAYER AND THE PARTY RESPONSIBLE FOR TAX.................. 313

A. Taxpayer of Excise Duty............................................................... 313

B. The Party Responsible for Excise Duty........................................... 314

IV. EXCLUSIONS................................................................................ 314

A. Exportation Exclusion.................................................................. 314

B. Diplomatic Exclusion.................................................................... 315

C. Other Exclusions.......................................................................... 315

V. POSTPONEMENT OF TAX.............................................................. 317

VI. TAX DEDUCTION.......................................................................... 318

VII. TAX BASE AND TARIFF OF TAX.................................................. 318

A. Taxation Measurements and Tax Base......................................... 318

B. Tariff of Tax................................................................................ 319

VIII. DECLARATION, ASSESSMENT AND PAYMENT OF TAX............. 319

IX. EXCISE DUTY COLLECTED BY CUSTOMS ADMINISTRATIONS.... 321

 

Section Eight

BANKING AND INSURANCE TRANSACTION TAX

 

I. SUBJECT OF TAX............................................................................ 322

II. EXCLUSIONS................................................................................. 322

III. TAXPAYER AND TAX BASE........................................................... 325

IV. TARIFF OF TAX............................................................................ 325

V. ASSESSMENT, DECLERATION AND PAYMENT OF TAX................. 326

 

Section Nine

SPECIAL COMMUNICATION TAX

 

I. SUBJECT AND TARIFF OF TAX....................................................... 327

II. TAXPAYER..................................................................................... 327

III. TAX BASE AND PAYMENT OF TAX............................................... 328

 

Section Ten

MOTOR VEHICLES TAX

 

I. SUBJECT OF TAX AND TAXPAYER.................................................. 329

A. Subject of Motor Vehicles Tax...................................................... 329

B. Taxpayer of Motor Vehicles Tax.................................................... 329

II. EXCLUSIONS................................................................................. 330

III. TARIFF OF TAX............................................................................ 331

IV. ASSESSMENT, NOTIFICATION AND PAYMENT OF TAX............... 332

A. Assessment, Accrual and Notification of Motor Vehicles Tax........ 332

B. Payment of Motor Vehicles Tax..................................................... 333...

V. INFORMING AND RESPONSIBILITY IN MOTOR VEHICLES TAX... 334

 

Section Eleven

INHERITANCE AND GIFT TAX

 

I. SUBJECT OF TAX............................................................................ 336

II. EXEMPTIONS AND EXCLUSIONS.................................................. 336

A. Exemptions.................................................................................. 336

B. Exclusions.................................................................................... 337

III. TAXPAYER.................................................................................... 338

IV. ASSESSMENT AND DECLARATION OF TAX................................. 339

V. TAX BASE AND THE FIRST ASSESMENT OF TAX.......................... 340

VI. ELEMENTS TO BE DEDUCTED FROM THE TAX BASE.................. 341

VII. ASSESMENT AND TARIFF OF TAX.............................................. 342

VIII. TAX RELATED SAFETY PRECAUTIONS....................................... 342

IX. PERIOD OF TAX PAYMENT........................................................... 343

 

Section Twelve

REAL ESTATE TAX

 

I. BUILDING TAX................................................................................ 344

A. Subject of Building Tax................................................................ 344

B. Taxpayer of Building Tax............................................................. 344

C. Exemptions and Exclusions in Building Tax................................... 345

D. Tax Base and Tariff of Building Tax............................................ 349

E. Assessment and Accrual of Building Tax...................................... 349

II. LAND TAX...................................................................................... 350

A. Subject of Land Tax..................................................................... 350

B. Taxpayer of Land Tax.................................................................. 351

C. Exemptions and Exclusions in Land Tax........................................ 351

D. Tax Base and Rate of Land Tax................................................... 354

E. Assessment and Accrual of Land Tax........................................... 354

III. SUBMITTION OF DECLARATION AND DECLARATION PERIOD IN BUILDING AND LAND TAXES.................................................................................................... 355

IV. PAYMENT OF BUILDING AND LAND TAXES................................. 356

 

Section Thirteen

STAMP DUTY

 

I. SUBJECT AND TARIFF OF DUTY.................................................... 357

A. Determining the Qualifications of the Papers............................... 357

B. Having More Than One Copy of the Paper.................................... 357

C. Having More Than One Contract and Transaction on the Paper... 358

D. Papers with More Than One Signature........................................ 358

E. State Office.................................................................................. 358

F. Exclusions.................................................................................... 358

II. TAXPAYE....................................................................................... 359

III. ASSESMENT AND PAYMENT OF DUTY........................................ 359

A. Taxation Measurements............................................................... 359

B. Obligation to Present Specific Amount of Money........................... 359

C. Tariff.......................................................................................... 359

D. Payment of Duty.......................................................................... 360

E. Responsibility............................................................................... 361

 

REFERENCES..................................................................................... 363

GLOSSARY......................................................................................... 365