TAX PROCEEDINGS SYSTEM OF TURKEY

TAX PROCEEDINGS SYSTEM OF TURKEY

ITEMS Features of Tax Proceedings Statistics Organization of Tax Judgment Application and terms Bringing tax lawsuit Implementing Judgments 2

TAX DISPUTE RESOLUTION Administrative & Judicial methods Compulsory administrative application Objection (Customs duties) Voluntary administrative application Correction of tax errors Conciliation before or after assessment Reduction in penalties repentance 3

FEATURES OF TAX PROCEEDINGS Administrative Jurisdiction system Administrative courts-tax courts Tax courts with private authority 4

3 rd Chamber 4 th Chamber 7 th Chamber 9 th Chamber General Assembly of Tax Courts Statisticss Year 2012, Number of Cases in Council of State Cases from 2011 New Cases Cases Judged Postponed until 2013 7500 5119 5049 7570 535 12904 9357 9526 12735 490 17167 8035 8168 17034 761 17937 10769 11220 17486 581 404 560 650 314 214 Total 55912 33840 34613 55139 5 Average Waiting Period (Day)

Statistics Number of Cases of Council of State Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 Cases 63480 70783 79269 107041 124363 121303 123497 146595 143133 Cases judged 56500 64931 68049 83101 91961 101481 99474 110022 140815 6

Statistics Budget of Judicial Organs Year 2010 2011 2012 2013 Budget of Ministry of Justice (Billion TL) 3,78 4,88 5,27 6,83

Statistics Number of Judges and Prosecutors NUMBER OF JUDGES AND PUBLIC PROSECUTORS ADMINISTRATIVE JUSTICE MEN % WOMEN % JUDGE 701 82,5 149 17,5 JUDICIAL JUSTICE JUDGE 3673 64,6 2014 35,4 PROSECUTOR 3783 93,7 256 6,3 TOTAL 8157 77 2419 27

ORGANIZATION OF TAX JUDGMENT Tax Courts Regional Administrative Courts Council of State Tax Case Chambers Tax Case Chambers General Assembly Assembly on the Unification of Conflicted Cases Constitutional Court 9

ORGANIZATION OF TAX JUDGMENT Tax Courts First instance court Decisions are taken by a chairman and two members Some disputes are solved by a sole judge Regional Administrative Courts Upon objection, examines the decision of administrative and tax courts given by a single judge Decisions are taken by a chairman and two members Final decision & cannot be appealed (except: act of change order for the sake of law) 10

ORGANIZATION OF TAX JUDGMENT Council of State The highest body in the administrative judiciary High administrative court and a consultancy and examination authority 3 rd, 4 th, 7 th and 9 th Chambers is tax case chambers İn addition to being an appeal authority, Chambers are also first instance courts in same cases If the State Council approves the decision of the tax court, then the trial process is completed If the decision of State Council reverses the decision of the tax court, the case file shall be sent to the relevant tax court for reconsideration 11

ORGANIZATION OF TAX JUDGMENT Tax Case Chambers General Assembly In case that the tax court resist against the State Council s reversing decision, the hearing process is extended In this case, the file is sent back to the State Council Tax Case Chambers General Assembly The decision taken is final and parties are obliged to obey this final decision Also appeal body for decisions given by Tax Case Chambers as a first instance courts

ORGANIZATION OF TAX JUDGMENT Assembly on the Unification of Conflicted Cases Consist of president, public prosecutor, vice-presidents, heads of chambers, justices Judgment issues in the Offical Gazette Judgment shall be abided by the courts, Chambers of State Council, and administrative bodies

LEGAL PROCEEDINGS Objection Appeal Correction of decision Change order for the sake of law Renewal of trial 14

CORRECTION OF DECISION Against the decision made by State Council Tax Case Chambers, Tax Case Chambers General Assembly and Regional Administrative Courts an action can be taken to correct that decision which can be only for once At least, one of the several reasons has to exist, such as Non-meeting of claims and objection in the decision Existence of contrary provisions in a decision Decision being contrary to the procedures or laws

CHANGE ORDER FOR THE SAKE OF LAW If the decisions for the Regional Administrative Courts and the decisions, which have become final without an appeal examination, of the tax courts or the State Council as the court of first instance constitute anything contrary to a law in force with regard to its qualitative nature, an appeal can be resorted for the sake of law if the State Council deems it necessary However, changed decision doesn t eliminate the legal consequences of the court order that has previously become final

RENEWAL OF TRIAL İt is possible to request the renewal of trial against the final decisions made by the State Council, regional administrative courts, administrative courts or tax courts in the event of availability of certain conditions The request for the renewal of trial shall be settled by the related court or the State Council Chamber that has made the former decision Main reasons for the renewal of trial are as follows Obtaining a document after the decisions has been made, due to force majeure situation Understanding that the document on which the decision is based are counterfeit Understanding that the expert person has intentionally given a report contrary to fact Participation of unauthorized persons in the trail

DUTIES OF TAX COURTS As court of first instance, the tax courts solve the disputes about; Taxes, charges, levies, similar revenues, interest rates and fines related to general budget, special provincial administrations, municipalities and villages Collection of these taxes 18

TERM OF LITIGATION IN ADMINISTRATIVE JUSTICE TERM OF LITIGATION IN ADMINISTRATIVE JUSTICE : TERM OF LITIGATION IN TAX COURTS TERM OF OBJECTION : TERM OF APPEAL : TERM OF CORRECTİON of DECİSİON 60 days as a rule 30 days as a rule 30 days 30 days 15 days 19

SUSPENSION OF EXECUTION If a filed lawsuit relates to a tax at the stage of accrual of tax, its collection suspends If the filed lawsuit is about a tax at the stage of collection, its collection doesn t suspends automatic If the assesment is based on the tax returns submitted with an «objection note», the collection of the tax doesn t suspends automatic Application to the State Council doesn t suspend the implementation of tax court order

FILING A LAWSUIT To file o lawsuit in the tax court; the tax should have been assessed the penalty should have been charged for the taxes collected through withholding, the payment to the claimant should have been made and the tax should have been withold by the payer Taxpayers cannot file a lawsuit for the tax bases they declared and taxes assesses over these bases However, it is possible to file a lawsuit, only if declared tax returns with an «objection note»

LIABILITY IN THE IMPLEMENTATION OF ADMINISTRATIVE JUDGMENTS Absence of implementation of administrative judgments might pave the way for: Legal Consequence (Compensation) Penal Consequence (Judicial penalty) Administrative Consequence (Disciplinary punishment) 22