The need for reform in Turkish tax system: Main problems and recommendations

Abstract

Although their form and purpose vary between countries, tax systems are of great importance in terms of developing the country, increasing investments and ensuring efficiency in resource allocation. For this reason, the necessary changes and reforms have been made in the tax system. Until today, several fundamental reforms and amendments have been made to make the Turkish tax system a modern tax system. As a result of these frequent changes, today's tax system has become extremely complex, unfair and unefficiency. In the Turkish tax system, source theory is essential in the definition of income. Therefore the tax base is limited, the number of taxpayers is low, and the informal economy is widespread. As a result of all this, frequent tax amnesties comes to the agenda in Turkey and the tax system is into a "vortex of failure".To make the Turkish tax system simpler, more comprehensible and effective, the "New Generation Tax System" should be created. The following reforms should be made in this process: the basic tax laws should be rewritten, and the net accretion theory should be accepted to make the tax system simple, understandable and justified. In addition, in order to implement the tax system in an efficient manner, the tax administration and tax audit restructuring should be completed.