This is also the tax plunder of the sects

Let's say you are a retired high-ranking bureaucrat or a local politician with high influence. In a place defined in the economy as the Anatolian Tigers, that is, a place where industrial and commercial earnings are high, you are going to do a charitable deed, you are going to have a mosque or a student dormitory for universities built... 

Before continuing the story, let's briefly recall the findings we made regarding taxes in recent weeks.  

2.5 TRILLION IS COLLECTED INSTEAD OF 14 TRILLION 

Almost everyone agrees that there is tax loss and evasion in Turkey. However, the answer to the question of how much tax loss and evasion there is has not really been given. I have made a claim twice in 12 Punto, based on two separate assumptions. 

1- In a country with a national income of 41 trillion liras, the potential tax that should be collected is approximately 18-20 trillion liras. (Between 40-55 percent in EU countries and the USA)

2- For the year 2024... If indirect taxes of around 6 trillion liras are collected in a country, the amount of direct tax to be collected according to the 30/70 ratio in modern country standards is at the level of 14 trillion (total tax 20 trillion) liras.

So, how much direct tax are we paying instead of 14 trillion liras? 2 trillion 464 billion liras. Workers and civil servants pay 1 trillion 93 billion liras of this. The 1 million 143 thousand companies and 2.5 million self-employed individuals in Turkey will pay a total of 1 trillion 370 billion liras. They are either evading an amount close to 12 trillion liras or transferring it to themselves or their companies with the advantages the state offers them.  

THEY TAKE 50 PERCENT OF THE INCOME AND PAY 3.4 PERCENT TAX 

The size of the economy (GDP) for 2024 is projected at 41 trillion TL. In an economy of 41 trillion, when you add it all up, can there be 1.4 trillion in Corporate Tax and income tax based on self-employment earnings? It is only 3.4 percent of the National Income. 

The number of companies in this segment we are talking about is 1 million 143 thousand... Taxpayers with self-employment earnings are also 2.5 million people... If you add them up, including babies in the cradle, it makes about 15 million people with their families. Let's round it to the income distribution statistical classification, let's accept it as 20 percent of the population, let's say 17 million people. The richest 20 percent of the population receives 50 percent of the income in Turkey. The direct tax paid by the segment receiving 50 percent of the income is 3.4 percent of the income... You calculate the extent of the loss, evasion, and exemption...

Regarding tax loss and evasion, especially for corporate tax, the thesis put forward by a large segment, including the Minister of Finance, is this: “The state provides exemptions to these companies for new investments. That is why tax is not collected.”

If the unpaid taxes were really only for new investment incentives, factories would be sprouting up everywhere in Turkey right now, and there would be no problem like unemployment. Anyway, that is not our topic today.

SECTS ARE LIKE TAX OFFICES

The state does not only provide tax advantages to companies for new investments. With the changes made in the income tax and corporate tax laws during the AKP era, by taking foundations and associations affiliated with sects into the status of being beneficial to the public (formerly by Council of Ministers decision, now by Presidential decree), it became possible for both individuals and institutions to avoid paying taxes, and for trillions of liras of public resources to be transferred to these sects.

There are two methods. The first one seems a bit innocent. You deduct the donation you make to an association beneficial to the public from your taxes. However, the amount you will deduct cannot exceed 5 percent of your earnings.

Example 1: You earned 1 million liras. The tax you will pay at 25 percent is 250 thousand TL... You made a donation of 150 thousand liras and received a receipt. The donation amount is 15 percent of your earnings, but you can only show 5 percent as an expense. You will pay tax on 950 thousand liras, not on 1 million liras. (237 thousand 500 TL at 25 percent. The state's tax loss for your 50 thousand lira donation was 12 thousand 500 TL.)

Buuuuut. Later, such a clause was added to these tax exemptions that they started with food banking, then they added clothing and household goods in addition to food. Later, they expanded the scope. They reached as far as student dormitories, scout camps, and mosque building associations.

What they call food banking is this: Ramadan has arrived, or even if it is not Ramadan, associations and foundations that organize in-kind and cash food aid, goods aid, etc., under the name of aid to the poor, aid to Gaza, aid to Somalia. Then the scope expanded. All of the aid made to these institutions, which gained the status of associations or foundations working for the public benefit again with the Presidential Decree, up to student dormitories and mosque building associations, that is, 100 percent, became deductible from taxes.

EXAMPLE 2: A Ramadan package will be distributed, or food aid will be sent to Gaza or Somalia. You are the owner of company X. You have 4 million liras in earnings and you will pay 1 million liras in tax to the state at 25 percent. You went to the charitable foundation or association. You received a 1 million lira donation receipt from them. Since there is no 5 percent condition here, you will no longer pay a penny of tax to the state. By the way, whether you really made 1 million liras of aid in exchange for the 1 million lira receipt or less is between you and that foundation-association manager. Maybe 500 thousand goes to the association, and the remaining 500 thousand can be shared "as deemed necessary".

EXAMPLE 3: Let's write a scenario based on the example at the beginning of the article. Let's say you are a retired high-ranking bureaucrat or a local politician with high influence. In a place defined in the economy as the Anatolian Tigers, that is, a place where industrial and commercial earnings are high, you are going to do a charitable deed, you are going to have a mosque or a student dormitory for universities built... 100 million liras are needed for the mosque or student dormitory. You don't have 100 million liras. You allocated the inherited land. You also put in 1 million liras in cash. That leaves 99 million... There is an easy way. Let's say you talked to the charitable owner of a company with 40 million liras in earnings. He will pay 10 million liras in tax. You issued a 10 million lira receipt. Now that charitable businessman will not pay a penny of tax to his state and nation. After that, the possibilities are many. Because it is out of the question for a brave tax inspector to emerge in this period who will audit such associations and foundations and those constructions. Maybe all of the 10 million liras will go to the construction of the mosque or dormitory, maybe a portion of it will be shared among “influential people as deemed necessary”. Thus, with the contribution of 10 or 15 “charitable businessmen”, our reputable and influential former bureaucrat or local politician will build a building and allocate it to the state or the sect. New organizations will be gone for another “charitable deed”. Of course, it won't end there. Since he is an influential bureaucrat or politician who organizes it... Of course, this time he will step in at various levels of the state and also arrange lucrative tenders from the state for the “charitable businessmen” who support that “charitable deed”...

Where will tax audits lead while these exemptions exist? How long will this order last? 

An institution called a foundation runs not with other people's and the state's money, but with the resources of those who founded that foundation.  The foundations in our country have turned into Parallel Tax Offices, a means of enrichment, and a center for training militants of Political Islam under the pretext of charitable deeds. If there is a strong social state, there is no need for foundations under the pretext of helping the poor. For a strong social state, the state collects taxes, not debt with interest, from the rich.    

While writing this article, I benefited from the articles on the website of the Tax Inspectors Association, the conversations of my Sworn-in Certified Public Accountant (YMM) and Certified Public Accountant (SMMM) friends, and the sources they sent by specifically underlining them.  

BIBLIOGRAPHY: • Income Tax Law No. 193 • Corporate Tax Law No. 5520 • Associations Law No. 5253 • Law No. 4962 on Making Amendments to Some Laws and Granting Tax Exemption to Foundations • Income Tax General Communiqué Serial No. 251 • Corporate Tax General Communiqué Serial No. 1 • Higher Education Law No. 2547 • Law No. 3294 on the Encouragement of Social Assistance and Solidarity.