1

DOKUZ EYLUL UNIVERSITY FACULTY OF BUSINESS

FISCAL ECONOMICSProf. Dr. Yeşim Kuştepeli

«Tax Evasion»

Murat OKTAY 2007431031

Seda YORUKBAY2007431052

Cafer SENGUL2007431024

Tax fraud is when someone pays too little tax or wrongly claims a tax repayment by acting dishonestly.(such as declaring less income, profits or gains than actually earned; or overstating deductions).Tax evasion is an activity commonly associated with the underground economy. 

2

In 1968, economist Gary Becker first theorized the economics of crime. It deals with the evasion of income tax. According to them, the level of evasion of income tax depends on the level of punishment provided by law.

Income tax evasion appears to be positively influenced by the tax rate, the unemployment rate, the level of income and dissatisfaction with government.

3

The level of evasion depends on a number of factors, one of them being fiscal equation. People's tendency to evade income tax declines when the return for due payment of taxes is not obvious.(Unvisible)

Evasion also depends on the efficiency of the tax administration. 

Corruption by the tax officials often makes control of evasion difficult. Tax administrations try to decrease these corruptions. These include, privatization of tax enforcement, tax farming, and institution of Pre-Shipment Inspection (PSI) agencies.

4

Privatization of tax enforcement for overcoming limitations of government tax administration in controlling tax evasion. The assumption is that leakage of revenue will lower under a privatized regime.

Tax farming is an old means of collection of revenue. A "tax farmer" buys a franchise by making pre-payment to the government. The tax-farmer, then invested with the authority of the government, goes into the farm and begins extracting taxes from citizens.

Pre-shipment Agencies like SGS, Cotecna etc. are employed to prevent evasion of customs duty through under-invoicing and misdeclaration.

5

Tax avoidance

•refers to the legal means by which taxpayers can reduce their tax liabilities.

•It is lawful to take all available deductions.

•It is also lawful to avoid taxes by making charitable contributions.

Tax evasion

•refers to illegal activities undertaken by taxpayers to escape paying taxes.

Anyone caught evading taxes is generaly subject to criminal charges and substantial charges.

‘ it is likely that he will go to prison if he is convicted of tax evasion’

One example ; like the difference btw shoplifting and shopping around.

Illegal, and cause a lot of trouble. That’s legal, in a free market.

Tax evasion ,

causes a significant loss of revenue to the community that could be used for funding improvements in

•Health•Education•Other gov. Programs.

As a result ;

•allows some businesses to gain an unfair advantage in a competitive market and some individual to not meet their tax obligations.

The burden of tax should not be fallen on other law abiding taxpayers.

TAX EVASION PENALTIES ;

Regulations concerning acts of tax evasion and tax evasion penalties are provided in Article 359 of the Tax Procedures code. The most important characteristic of  the tax evasion penalties is that, the taxpayers who commit acts of tax evasion, become subject to penalties of imprisonment. 

The text of article 359 ;

A) Regarding the following books and documents that are  maintained or drawn up according to tax laws, and that are required to be retained and presented:

Those who apply collision in accounting applications, who open accounts to the names of fictitious persons or to the name of persons who are irrelevant to the transactions shown in the records, or who record  the accounts and transactions that should be recorded in the legal entries  wholly or in part, to other books, documents or in other accounting media in a manner  that results in  the reduction of the tax base

Those who falsify or conceal books, records or documents, or who draw up documents that contain false and misleading information,  or who use such documents

Become subject to a penalty of imprisonment between 18 months to 36 months

B) Those who destroy the pages of the books , records or documents which must according to tax laws be maintained and replace the pages of the books with other pages or with no pages at all; those who fraudulently draw up all or a part of the originals and the copies of the documents, or who use such documents, are subject to penalty of imprisonment between 3 to 5 years.

• A fraudulent document is a document that is drawn up to show a transaction or situation that has not taken place, as if such transaction or situation actually took place.

C) Those who print the documents that can only be printed by printers that have signed a special contract by the Ministry of Finance, without receiving an authorization from the Ministry, are subject to penalty of imprisonment between 2 years to 5 years.

The provisions of this article shall not apply to those who notify the concerned authorities pursuant to the conditions of repentance according to article of 371.

The application of the penalties  mentioned in this article, shall not impede the application of the tax loss penalty stated in Article 344 separately.

www.muhasebevergi.com