Tax loss refers to the tax not being accrued on time or being accrued incompletely due to the taxpayer or responsible person not fulfilling their taxation-related duties on time or incompletely (Tax Procedure Law no. 213 art. 341). In case of tax loss, a tax loss penalty is imposed on the taxpayer (VUK art. 344).
What is Tax Loss?
Tax loss arises in the following cases:
- Failure to accrue tax on time
- Incomplete accrual of tax
- Unjust refund of tax
The taxpayer makes incomplete declarations regarding income, corporate, VAT, SCT and other taxes, does not make them at all, or makes them after the due date; Issuing/using fake or misleading documents will result in tax loss.
Tax Loss Penalty - Calculation (VUK art. 344)
The tax loss penalty is a multiple of the tax loss. In other words, for a tax loss of 100,000 TL, a penalty of 100,000 TL is imposed.
Tripling the Penalty
If tax loss is caused by one of the smuggling acts listed in VUK Article 359, the penalty is applied three times:
- Forging or hiding books and documents
- Forging or using forged documents
- Preparing or using documents that are misleading in terms of their content
- Destroying books, records and documents
Halfing the Penalty
In case the taxpayer spontaneously requests tax inspection and pays the tax and penalty arising within 30 days, the penalty is applied at half (VUK art. 371 - repentance and correction).
Repentance and Correction (VUK art. 371)
If the taxpayer, with his/her own consent, notifies the administration of the acts that cause tax loss and pays the missing taxes before the investigation begins, no tax loss penalty will be imposed; Only delay fee is calculated. Regret conditions:
Conciliation (TPL Additional Article 1-11)
Conciliation may be requested before filing a lawsuit against tax loss penalties. In compromise, the tax and penalty amount is negotiated by the parties; If an agreement is reached, the agreed upon amount cannot be the subject of a lawsuit.
Types of Compromise
- Pre-assessment reconciliation:Before the tax audit report is prepared
- Post-assessment reconciliation:After the assessment slip is issued (application within 15 days)
Reduction in Penalty (VUK art. 376)
If the taxpayer gives up filing a lawsuit and pays the tax and penalty within 30 days following the notification of the tax/penalty notice:
- 50% discount on tax loss penalty
- 25% discount if repeat violation
If the objection to the original tax has not been waived, the reduction is applied only to the penalty.
Case in Tax Court
Time to File a Lawsuit
A cancellation lawsuit is filed in the tax court against the tax loss penalty notice within 30 days from the notification (İYUK art. 7).
Impact of the Case
Collection stops automatically upon filing a lawsuit in the tax court (IYUK art. 27/4). However, if the request for stay of execution is rejected or a guarantee is requested, the situation changes.
Reasons for Cancellation
1) Shape Injuries
- Incorrect taxpayer information in the notice
- Incorrect display of tax type
- Incorrect statement of tax periods
- Irregular notification notification
- Unjustified/insufficiently justified
2) Substantive Reasons
- No tax loss actually occurred
- The tax was paid by another taxpayer
- Inaccurate determination of tax base in ex officio tax assessment
- Document review is unjustified in cases of false/misleading document allegations
- Expiration of statute of limitations (VUK art.114 - accrual statute of limitations is 5 years)
- Directing tax liability to the wrong person
3) Penalty Account Injuries
- Calculation of the penalty at the wrong rate (if the VUK Article 359 conditions are not met for triple penalty)
- Imposition of full penalty despite exercising the right of discount
- Punishment despite meeting repentance conditions
Jurisdictional and Competent Court
- Assignee: Tax Court.
- Authority: The court where the tax office that assesses and accrues taxes is located (İYUK art. 37).
Legal Remedies
- Appeal: Regional Administrative Court within 30 days from the notification of the tax court decision.
- Appeal: Appeal to the Council of State in limited case types of İYUK art.46-47.
Collection Statute of Limitations
The tax loss penalty is subject to a 5-year statute of limitations for collection in accordance with Article 102 of the Public Receivables Law No. 6183. This period runs from the beginning of the calendar year following the finalization of the decision.