Turkey– Taxation

Candidate countries conduct negotiations with the European Union (EU) in order to prepare themselves for accession. The accession negotiations cover the adoption and implementation of European legislation (acquis) and, more specifically, the priorities identified jointly by the Commission and the candidate countries in the analytical assessment (or ‘screening’) of the EU’s political and legislative acquis. Each year, the Commission reviews the progress made by candidates and evaluates the efforts required before their accession. This monitoring is the subject of annual reports presented to the Council and the European Parliament.

ACT

Commission Report [COM(2011) 666 final – SEC(2011) 1201 – Not published in the Official Journal].

SUMMARY

The 2011 Report notes limited progress in terms of legislative alignment. The European Commission observes no advancement on direct taxation matters.

EUROPEAN UNION ACQUIS (according to the Commission's words)

The acquis on taxation essentially covers the area of indirect taxation, which comprises VAT (value-added tax) and excise duties. It lays down scope, definitions and principles for VAT. Excise duties on energy products, tobacco products and alcoholic beverages are regulated by EU legislation. With regard to direct taxation, the acquis covers some aspects of the taxation of individuals’ savings and corporate taxes. Furthermore, Member States are required to comply with the principles of the code of conduct relating to corporate taxes, which seeks to abolish harmful tax measures. Administrative cooperation and mutual assistance between Member States aims at ensuring the smooth running of the internal market in the field of taxation and provides instruments for preventing intra-Community fraud and tax evasion. Member States must ensure that they have the necessary implementation capacities, specifically connectivity with the EU’s IT taxation systems.

EVALUATION (according to the Commission’s words)

On taxation, there has been limited progress on legislative alignment, particularly towards eliminating some discriminatory practices in the taxation of tobacco. The increase in excise duty on spirits contradicts the Action plan agreed with the Commission on that issue. Abolition of discriminatory practices in taxation is key to making further progress in this chapter. No progress can be reported on direct taxation.

RELATED ACTS

Commission Report [COM(2010) 660 final –SEC(2010) 1327 – Not published in the Official Journal]. In the 2010 Report the Commission regretted the limited level of alignment on taxation matters, but also highlighted the improvement in the running of taxation institutions. Particular effort was required to ensure efficient financial controls.

Commission Report [COM(2009) 533 final – SEC(2009) 1334 – Not published in the Official Journal].

Commission Report [COM(2008) 674 final – SEC(2008) 2699 – Not published in the Official Journal].

The 2008 Report indicated that alignment of legislation in this area had not progressed very far. However, the Report highlighted some progress with regard to the modernisation of the tax administration.

Commission Report [COM(2007) 663 final – SEC(2007) 1436 –Not published in the Official Journal.

In its 2007 Report, the Commission found that new progress had been made, but that full alignment was still not a reality. Discriminatory practices still persisted in certain areas, such as alcoholic products and tobacco. Furthermore, administrative capacity needed strengthening.

Commission Report [COM(2006) 649 final – SEC(2006) 1390 –Not published in the Official Journal].

The 2006 Report noted that limited progress has been made in the area of taxation. It stated that further efforts would be required to achieve alignment with the acquis, especially as regards the scope and rates of VAT, the structure and rates of excise duties, and direct taxation.

Commission Report [COM(2005) 561 final – SEC(2005) 1426 –Not published in the Official Journal].

The 2005 Report noted that Turkey still needed to take substantial steps to achieve alignment with the acquis, particularly as regards the scope and rate of VAT, the structure and rate of excise duties, and direct taxation. Turkish tax legislation still contained discriminatory measures and administrative capacity remained weak.

Commission Report [COM(2004) 656 final – SEC(2004) 1201 –Not published in the Official Journal].

The 2004 Report noted limited progress in the area of indirect taxation but no progress on direct taxation or administrative cooperation. Overall, the Turkish tax regime remained partly aligned with the acquis, and important efforts still needed to be made in all areas under that chapter. Alignment was particularly necessary with regard to VAT, the scope of exempt transactions and applied rates. With regard to taxation, excise duties ought not to penalise imported products. Administrative capacity also needed to be substantially strengthened, in particular to improve tax collection.

Commission Report [COM(2003) 676 final – SEC(2003) 1212 –Not published in the Official Journal].

The 2003 Report found that Turkey had made limited progress in terms of both legislation and tax administration capacity.

Commission Report [COM(2002) 700 final – SEC(2002) 1412 –Not published in the Official Journal].

The 2002 Report stated that Turkey had made substantial progress in aligning its tax legislation with the acquis in the area of indirect taxation.

Commission Report [COM(2001) 700 final – SEC(2001) 1756 –Not published in the Official Journal].

The 2001 Report considered that Turkey had moved forward, particularly with regard to excise duties. In fact, the level of duties was higher than the minimum rate applied in the European Community (EC) to all fuels. As regards direct taxation, the tax system applicable to mergers, divisions and transfers of shares as well as the capital gains rules were now in line with the acquis. As far as administrative capacity was concerned, the implementation of a personal identification number for tax purposes was aimed at improving the collection of tax.

Commission Report [COM(2000) 713 final –Not published in the Official Journal]. The 2000 Report noted that very little progress had been made in the area of taxation since the last evaluation.

Commission Report [COM(1999) 513 final – Not published in the Official Journal].

Commission Report [COM(1998) 711 final –Not published in the Official Journal].

See also

• The website of the Directorate-General for Enlargement, Enlargement Strategy and Progress Reports 2011

Last updated: 29.12.2011