Tax Law and Tax Disputes

A tax audit is the administrative process that examines whether the tax payable by the taxpayer is correct and, where necessary, forms the basis for assessment and penalty acts. The subject of the audit, the taxation period, the act that starts the audit, production requests, digital records, cross-audits, audit records and the lawfulness of reports are evaluated together.

The main legal services we provide during a tax audit are as follows:

• Determining the scope, period and legal basis of the audit
• Legal management of the production of books, records, documents and electronic data
• Reviewing audit records for their content, statements and evidentiary consequences
• Preparing the taxpayer’s explanations and written legal opinions
• Evaluating bank, POS, e-Invoice, e-Archive, e-Ledger, inventory, production and cross-audit data
• Reviewing the assumptions, comparisons and calculations in the tax technical report and the tax audit report
• Evaluating the selection of comparables, yield rates, book inventory, forged document and related-person allegations
• Submitting records and documents in the taxpayer’s favor to the file
• Comparing pre-assessment conciliation with direct litigation options
• Building the criminal law defense at an early stage in files where a tax offense report and an opinion are possible

Because statements made and audit records signed during the audit may later be used as evidence in administrative and judicial processes, the technical calculations and the legal defense are prepared without being separated from each other.

Basis: Law No. 213 (VUK)

In supplementary (ikmalen), ex officio (re’sen) or administrative assessments, the ground of the assessment, how the difference in the tax base was calculated, the basis of the assessment committee (takdir komisyonu) or the audit report, the event giving rise to the tax, limitation, service and the type of penalty are examined. The principal tax, the tax loss penalty (vergi ziyaı cezası), the irregularity penalty (usulsüzlük cezası) or special irregularity penalty (özel usulsüzlük cezası), and the interest components in the notice may each require a different legal evaluation.

There is more than one route available after an assessment. Depending on the circumstances of the specific case, one of conciliation, penalty reduction, correction, complaint, the mutual agreement procedure or an action before the Tax Court, or the statutory relationship among them, is evaluated. Because choosing one route may affect the right to apply to another, the decision must be made before the time limit expires and after the financial result has been calculated.

Basis: Law No. 213 (VUK) · İYUK (Law No. 2577)

In tax loss penalties and irregularity and special irregularity penalties, the elements of the act, the addressee of the penalty, the period, repetition, participation, the electronic document obligation, proportionality and the finding on which the penalty is based are examined. The name of a penalty or its presence in a notice does not mean that the act is lawful in every case; however, the removal of a penalty cannot rest solely on an allegation of a formal error either.

Conciliation (Uzlaşma)

Under the regulation in force, pre-assessment and post-assessment conciliation apply to certain tax loss penalties and to irregularity and special irregularity penalties exceeding the monetary limit. Because the principal tax is not within the scope of conciliation, penalties tied to the acts in Article 359 of the Tax Procedure Law No. 213 (VUK) and certain invitation-to-explain situations fall outside the scope, and monetary limits may change, eligibility is checked against current legislation.

Penalty Reduction

The penalty reduction provisions of the Tax Procedure Law are evaluated by taking into account the type of penalty, the conditions of application and payment, and consequences such as not filing an action. Reduction and the litigation or conciliation options are addressed not only on the basis of the reduction rate but by comparing the lawfulness of the assessment and the total financial impact.

Correction and Complaint for Tax Errors

In disputes of the nature of a calculation or taxation error, an application for correction and, where the conditions are met, the complaint route may be used. This route is not a general application that replaces a tax action whose time limit has passed for any allegation of unlawfulness. Whether the dispute falls within a tax error as defined in the Tax Procedure Law is determined first.

Invitation to Explain

In an invitation-to-explain letter (izaha davet), the subject of the finding, the relevant tax and period, the time for explanation, the documents to be submitted and the effect of the explanation given on the subsequent audit or penalty process are examined. The possibilities that the explanation is accepted, found insufficient, or that the return is corrected lead to different consequences.

Repentance and Rectification (Pişmanlık ve Islah)

For taxes based on a return, if the statutory conditions are met, the repentance provisions may have consequences in respect of the tax loss penalty. Because the start of an audit, referral to the assessment committee, a report, an invitation to explain and the nature of the act may affect eligibility for this route, suitability is checked before an application is made.

Mistake and change of opinion under Article 369 and the ruling request (özelge) under Article 413 of the Tax Procedure Law are also evaluated according to the nature of the file. The scope and protective effect of an opinion given by the administration to a particular taxpayer are not automatically transferred to another person’s file.

Basis: Law No. 213 (VUK) · GİB conciliation notice

In an action filed before the Tax Court, the act subject to the action, the relief sought, subject-matter and territorial jurisdiction, the proper respondent, the date of service, the time limit, the factual events, the legal grounds and the evidence must be set out correctly. Not only the result of the tax audit report but all elements of the assessment or penalty act based on the report are examined.

Our work within tax proceedings:

• Actions against tax and penalty notices
• Actions arising from returns filed under reservation (ihtirazi kayıt)
• Actions against tax refund, offset and rejection acts
• Actions against payment orders and acts for the collection of public receivables
• Actions against precautionary assessment and precautionary attachment
• Applications against e-attachment, bank account attachment and other attachment acts
• Actions against acts taken against persons liable for tax (vergi sorumlusu), statutory representatives and company shareholders
• Appeal (istinaf) against Tax Court decisions
• Further appeal (temyiz) before the Council of State against decisions meeting the statutory conditions
• Evaluating the financial and procedural consequences of waiving a legal remedy
• Requests for a stay of execution where necessary
• Applications arising from non-implementation of a final decision

The effect on collection of a timely action against an assessment is not the same as that of an action against a payment order, attachment, return filed under reservation or other special acts. Where collection does not stop on its own, the conditions for a stay of execution and the possibility of security are addressed separately.

The possibility of appeal or further appeal before the Council of State against a Tax Court decision depends on the type of dispute, the applicable monetary limit and the transitional provisions. It is not assumed that every decision is open to further appeal. Implementation of the decision by the administration, refund, cancellation and, where the conditions exist, interest claims are followed up; the implementation obligation in Article 28 of the İYUK is also examined separately.

Basis: İYUK (Law No. 2577)

Once a tax debt reaches the collection stage, the process runs under Law No. 6183 on the Collection Procedure of Public Receivables (Amme Alacaklarının Tahsil Usulü Hakkında Kanun). An action against a payment order differs from an action against an assessment, and the legal grounds that may be raised are limited by law. Claims that the debt does not exist, has been partly paid or is time-barred, and the conditions of service, duplicate enforcement, liability and finality, are examined on the specific file.

In this scope:

• Reviewing the payment order and the list of underlying debts
• Determining electronic notification and the time limit for an action
• Comparing the records of the debt’s origin, finalization, payment and limitation
• Reviewing e-attachment and attachments of bank accounts, wages, receivables, vehicles and real property
• Attachment notices sent to third parties and third-party ownership claims (istihkak)
• Requests for security, precautionary assessment and precautionary attachment acts
• Requests to narrow an excessive attachment or to lift the attachment
• Exemption from attachment, sale and liquidation acts
• Deferral and installment applications
• Where a special restructuring law is in force, a review of its scope and time limit
• Limitation period for collection and extinguishment of the debt
• Options for administrative application, litigation and stay of execution

These items are evaluated. Periodic restructuring laws are not a permanent right; they apply only during the period they are in force and under the conditions of the law. For this reason, restructuring amounts, rates or final application dates, which would quickly become outdated, are not published on this page.

Review the scope of the Public Receivables, Payment Orders and E-Attachment service.

Basis: Law No. 6183 · İYUK (Law No. 2577)

Directing a company’s tax debt to a manager, statutory representative, liquidator or shareholder does not mean automatic and unlimited liability. The type of company, the person’s capacity and term of office, the period to which the debt relates, the time the tax duty was to be performed, the enforcement against the company, impossibility of collection or the realization that collection will not be possible, the shareholding ratio, the authority of representation and the notification acts are examined together.

Our work in this area:

• Liability of limited liability company shareholders for public debts
• Liability of statutory representatives in joint-stock and limited liability companies
• Payment orders directed at managers, board members, liquidators and former managers
• Comparing the dates of taking and leaving office with the debt period
• Effect of share transfers and management changes on liability
• Statutory conditions between enforcement against the company and enforcement against the representative or shareholder
• Reviewing enforcement directed at more than one person for the same debt
• Effect of company mergers, demergers, changes of type, liquidation and deregistration
• Actions on payment orders, e-attachment and lifting of attachment
• Recourse of the liable person who made the payment against the company or other liable persons

Liability is not assessed by looking only at the trade registry record or the period of the debt; the relevant tax and collection legislation and current case law are addressed together.

Article 10 of the Tax Procedure Law (VUK) and Article 35 and repeated Article 35 (mükerrer 35) of Law No. 6183 are different liability provisions. It is determined in what capacity and on which provision the payment order is based. The liability of a limited liability company shareholder tied to the share and the liability of a statutory representative cannot be established on the same ground. In a joint-stock company, merely being a shareholder does not, on its own, mean being a statutory representative.

Basis: Law No. 213 (VUK) · Law No. 6183

In VAT and other tax refund files, the arising of the right to a refund, the nature of the delivery or service, the deduction and input lists, supporting documents, cross-audit, special rules, security, the tax audit report or sworn financial adviser report, the offset (mahsup) request and the administration’s rejection or partial refund act are examined.

Where a refund request is delayed, rejected, partly accepted or offset against another debt, the options for administrative application and litigation are evaluated together with interest and the consequences of clawback. Because monetary limits and document conditions may change periodically, the legislation of the relevant period is the basis for each request.

Basis: Law No. 213 (VUK) · İYUK (Law No. 2577) · Law No. 3065 (VAT)

In goods, services, financing, licensing and intra-group transactions between related persons, compliance with comparable arm’s length transactions, method selection, comparability, consistency between the contract and actual practice and documentation obligations are examined. Transfer pricing reports, comparables analyses, disguised profit distribution (örtülü kazanç dağıtımı), thin capitalization (örtülü sermaye), interest, exchange differences, and VAT and withholding tax effects are addressed together.

In multinational groups, country-by-country reporting, the master file, the local file, the formation of a permanent establishment and the risk of double taxation are evaluated within the framework of domestic law and the applicable international agreements.

Basis: Law No. 5520 (Corporate Tax)

In company formation, investment, financing, transfer of shares or assets, merger, demerger, change of type, liquidation and restructuring transactions, economic substance and tax consequences matter as much as legal form. A tax law review aims to identify past-period risks, existing disputes, tax debts, incentive and exemption conditions, contractual tax provisions and post-transaction obligations.

In this scope:

• Tax status assessment and risk matrix
• Tax consequences of share and asset transfers
• Merger, demerger, change of type and liquidation transactions
• Reflecting tax debts and disputes in the contract
• Tax representations, warranties, indemnity and price adjustment clauses
• Financing, security, interest and thin capitalization risks
• Legal review of incentive, exemption and exception conditions
• Post-transaction return, notification and record obligations

These items are addressed. The aim is not to reduce the tax burden in a manner contrary to law, but to ensure that the transaction is structured in compliance with current legislation, that foreseeable risks are identified and that responsibility between the parties is clearly regulated.

The domestic minimum corporate tax and, for multinational groups within scope, the domestic and global minimum top-up corporate tax are examined as separate regulations. The obligation, exemption and transition conditions and the structure of the group are evaluated together with the company’s financial adviser or sworn financial adviser.

Basis: Law No. 213 (VUK) · Law No. 5520 (Corporate Tax) · GİB minimum tax notice

In transactions with a connection between Türkiye and abroad, domestic law and the relevant double taxation treaty are evaluated together. A person’s tax residency, full or limited tax liability, the formation of a permanent establishment, the nature of the income and the source country affect which state has the right to tax and to what extent.

Our work in international tax:

• Tax residency of individuals and companies
• Disputes over full and limited tax liability
• Permanent establishment and business profits
• Dividends, interest, royalties and technical service payments
• Income of foreign affiliates and branches
• Foreign tax credit and relief from double taxation
• Certificates of residence and use of foreign documents
• Transfer pricing and related-company transactions
• Application of double taxation treaties
• Mutual agreement procedure applications
• Income in Türkiye of Turkish citizens living abroad
• Türkiye-source income of foreign individuals and companies
• Translation, certification and service processes for foreign court or administrative documents

The effect of the mutual agreement procedure on the time limit for an action and on collection, and the consequences if the application is accepted, are subject to special rules. The scope and time limit of the agreement under which the application is made are determined file by file.

Legal representation in Türkiye is distinguished from applications that must be made in a foreign country. In matters requiring evaluation of foreign law, coordination with competent legal and tax experts in the relevant country is planned for the specific file. Choosing the language of communication does not mean authority of direct representation in a foreign country.

Basis: Law No. 213 (VUK) · Law No. 5520 (Corporate Tax) · GİB international legislation

The purchase and sale of real property, leasing, capital gains on value increase, title deed fees, property tax, high-value residence tax, municipal revenues and inheritance and transfer tax may each give rise to different obligations. Tax liability, the tax base, market value, the date of acquisition and disposal, the opening of the succession, exemptions, returns and service acts are examined together.

Where necessary, disputes in this area are conducted in coordination with the Real Estate Law, Inheritance Law and Administrative Law practice areas.

Review the scope of the Foreign Heirs and International Estate Matters service.

Basis: GİB tax legislation

A report prepared at the end of a tax audit may give rise to a criminal investigation in addition to tax assessment and an administrative penalty for the same event. A tax action and criminal proceedings are subject to different rules on jurisdiction, proof and outcome; however, the same book, document, transaction and technical report may be effective in both files. The defense strategy is built by preserving this distinction and taking into account the interaction between the files.

Our work in tax criminal law:

• Allegations of issuing or using forged documents
• Allegations of documents misleading as to their content
• Allegations of concealing, destroying or failing to produce books, records and documents
• Allegations of accounting fraud and double books or records
• Allegations of altering electronic books and documents or making them inaccessible
• Review of the tax offense report and the opinion of the report evaluation commission
• Separating the responsibility among the company, managers, employees, financial advisers and counterparties
• Evaluating intent, participation, continuous offense, effective repentance or penalty reduction conditions
• Prosecutor’s investigation, statements, expert examination and the prosecution stage
• Coordinating the evidence in the Tax Court file and the criminal file
• Appeal, further appeal and legal applications connected with enforcement of the sentence
• Breach of tax confidentiality and connected allegations of offenses

Payment or restructuring of a tax debt, or the outcome of a tax action, does not automatically end the criminal file in every case. The date of the event, the alleged act, the favorable provisions in force and the special provisions of the Tax Procedure Law are evaluated separately.

Basis: Law No. 213 (VUK)

Electronic document and record systems carry special obligations as to creation, signing, uploading the certificate (berat), storage, production and dates of service. Digital evidence such as system records, user activity, integrator data, the fiscal seal, and bank and POS information may be at the center of a tax audit.

In this scope, tax and penalty acts relating to e-Invoice, e-Archive Invoice, e-Waybill, e-Ledger, the Book-Declaration System (Defter-Beyan Sistemi), electronic notification, payment recording devices, card payments and e-commerce reports are examined. In electronic notification, distinguishing the date on which the document reached the system from the date on which it is deemed legally served is important for correctly calculating the time limit for application and action.

Basis: Law No. 213 (VUK) · VUK Communiqué No. 509

Customs duties, additional assessment, origin, tariff, value, surveillance, import taxes and customs fines are subject to special customs legislation and their own administrative application routes. This page covers customs disputes only as a related area; detailed processes are addressed on the International Trade and Customs Law page.

Review the scope of the International Trade and Customs Law service.

Basis: Customs Law No. 4458