DOKUZ EYLUL UNIVERSITY

FACULTY OF BUSINESS
FISCAL ECONOMICS
Prof. Dr. Yeşim Kuştepeli

«Tax Evasion»

Murat OKTAY
2007431031
Seda YORUKBAY
2007431052
Cafer SENGUL
2007431024

1
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.

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 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.

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 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.

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 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.

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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.

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