Minister Mehmet Şimşek takes action on tax exemptions and deductions

It has been reported that Treasury and Finance Minister Mehmet Şimşek, who pointed to 2024 for tax reform, has requested a detailed study from the Revenue Administration within the scope of the statement in the Medium-Term Program (OVP): “Tax expenditures will be reviewed, and ineffective exemptions, deductions, and discounts will be abolished.”

According to the report by Hülya K. Oruçoğlu from Sözcü, the study will involve a thorough review of all exemptions and deductions across tax types, detailing which exemptions are functioning effectively and what advantages each provides.

Stating that the goal is to ensure tax justice according to the OVP, Tax Expert Mahmut Aydoğmuş said, “Ineffective exemptions, deductions, and discounts in tax expenditures will be abolished.”

“THE BURDEN IS ON VAT AND SCT”

Noting that a total of 994 billion TL in exemptions and deductions were provided across all tax types this year, including 443 billion TL in Income Tax and 280 billion TL in Corporate Tax, Aydoğmuş stated, “This amount constitutes 23 percent of the total planned tax revenue collection. There are 160 regulations regarding Income Tax and Corporate Tax centered on exemptions and deductions. It is as if the Income and Corporate Tax laws have adopted a logic of ‘how can we avoid collecting taxes.' The desired level in direct taxes cannot be achieved, and the burden is actually placed on taxes like VAT and SCT, which lack the spirit of tax justice.”

“COMPANIES WILL BE AFFECTED MORE”

Noting that exemptions and deductions, which are the most important topic in tax reform, must be revised, Aydoğmuş said, “If a revision occurs, it will be primarily directed at capital gains. In this context, there will be an increase in Income and Corporate Taxes, and companies will be affected more by this.”

JUSTICE IN INCOME DISTRIBUTION, TAXATION ACCORDING TO FINANCIAL CAPACITY

Aydoğmuş added:

“Tax reform is a topic that maintains its importance, but it has not been able to go beyond romantic rhetoric. We need a tax reform built on constitutional criteria such as ensuring justice in income distribution, taxation according to financial capacity, and spreading the tax base. It is also my hope that some Income and Corporate Tax exemptions and deductions, which cover 160 articles and pose a problem for the public conscience, will be addressed with tax reform and that privileged groups will be minimized.”

News Source: 12punto