In furtherance of the Bill of Taxpayers' Rights of 2006 by the Turkish Revenue Administration and other developments on taxpayer rights, Turkey has now formed a Taxpayers Rights Board to deal with the taxpayers' complaints and advise to the Ministry of Treasury and Finance. The details regarding the election of the members and functions of the Board will be determined through regulation.
On 18 April 2020, Turkey has introduced for the first time the Taxpayer Rights Board (Board) which is established as an advisory body under the Ministry of Treasury and Finance (Ministry) as per the Presidential Decree on the Amendment of Certain Presidential Decrees numbered 60 (Presidential Decree) to be effective from the publication date. In his speech dated 10 April 2019 in the Program on the New Economy Program Structural Transformation Steps 2019, the Minister had already given hints regarding the establishment of a "Taxpayer Rights Executive Board" within the scope of tax transformation reforms. The Minister also emphasized that "taxpayer rights" is one of the topics that they will focus within this process of tax transformation and they will ensure that the bill of taxpayers' rights announced by the Turkish Revenue Administration in 2006 becomes binding. This being said, it should be noted that the taxpayer rights procured under the bill are still lack of a binding legal basis while the working procedures and principles of the Board are also yet to be regulated. Nevertheless, the establishment of the Board is beyond any doubt a positive step towards the realization of the taxpayer rights as seen in the examples of other countries.
A tax ombudsman institution in Turkey?
According to the Decree, the Board will be responsible for (i) determination of the main principles and rules regarding the protection of taxpayer rights, (ii) ensuring that these principles and rules are adopted and duly applied, (iii) evaluation of the applications in relation to taxpayer rights, and (iv) advising the Ministry. The constitution of the Board, election and appointment of its members, their terms of office and working procedures and principles of the Board will be regulated by regulation. The Board is authorized to request any information in relation to its duties from the public institutions and the public institutions are required to provide such information. The members of the Board as well as any personnel in charge shall not disclose or benefit from any confidential information, personal data, trade secrets and any documents thereof, that are obtained during the fulfillment of their duties and this confidentiality obligation remains effective after their terms of office.
Formation of tax ombudsman institutions is one of the mechanisms that contributes to the protection of taxpayer rights. These mechanisms in general, act independent from the revenue administrations, evaluate the complaints on the acts of the revenue administrations and contribute to the resolution of disputes by reconciliation. They also analyze the general and systematical problems and advise to the revenue administrations. Although Turkey already has a general ombudsman institution (Kamu Denetçiligi Kurumu), the Board seems to be introduced as a special ombudsman institution for tax-related matters considering the need for expertise in the said field, in line with the practice of other countries. As in the examples of the Taxpayer Advocate Service in United States and the Office of the Taxpayers' Ombudsman in Canada, special ombudsman mechanisms are put into practice following the adoption of taxpayer rights laws. The tax ombudsman institutions are also essential for the surveillance of the effectiveness of internal complaint mechanism under the relevant tax administrations.
What was the current situation in Turkey on taxpayer rights?
In the OECD report dated 1990 entitled "Taxpayers' rights and obligations - A survey of the legal situation in OECD countries", it was pointed out that only a small number countries had introduced a "bill of taxpayers' rights" although the taxpayers are given certain liabilities and rights in every country. Following the report, the countries began to place emphasis on the bill of taxpayers' rights. The Turkish Revenue Administration established in 2005, for the first time introduced the "taxpayer rights" perspective into the tax administration whereas both the tax regulations and the practice heavily depend on a "taxpayer liabilities" perspective. The words of "taxpayer rights" was mentioned five times under the Law on Organization and Duties of the Revenue Administration numbered 5345 in contrast to the previous legislation. In 2006, the Turkish Revenue Administration prepared a Bill of Taxpayers' Rights (Bill). When compared with the rights set forth under the OECD report of 1990, the Bill includes the right to be informed, assisted and heard, the right to privacy and the right to confidentiality and secrecy, although does not explicitly include the right of appeal, the right to pay no more than the correct amount of tax and the right of certainty. In addition to the aforementioned rights, the Bill sets forth certain other undertakings on the part of Revenue Administration including fair, legal and impartial application of the tax laws in a way to sustain the competition; the prompt notification of developments on tax matters through the official website and printed publication; accurate, impartial and consistent application of the laws during tax inspections and keeping the taxpayers informed during each phase of tax inspections; promptly responding to any submitted complaints; and constant improvement in the quality of the services.
The preparation of the Bill is a positive development in pursuance of the world's trend, although there are a few drawbacks about the Bill. The Bill is not a legally binding document but merely sets out the perspective of the Turkish Revenue Administration and it does not include some of the rights acknowledged by OECD. Another drawback is that the Turkish Revenue Administration is, so to speak, the sole "signatory" of the Bill whereas other important tax administrative bodies, e.g. Turkish Tax Inspection Board, are not parts of this process.
The Turkish Revenue Administration facilitated the taxation process for the taxpayers by providing an online platform through which the taxpayers can fulfill their obligations. The Turkish Revenue Administration also prepared a Handbook of Taxpayer Rights and Duties dated 2014. The Handbook sets out under the title of "general rights", the right to petition and to be informed, right to apply to ombudsman, right to bring action, right of representation, right to be treated equally and right to obtain a fair, equal and respectful service. The "special rights" are the rights provided under specific tax laws in Turkish legislation and set forth under the Handbook as right to reconciliation, right to regret, right to correction request, right to apply through complaint, right to object to the order for payment, right to tax privacy, right to postponement of payment and payment in instalments, rights during tax inspections, right to discount in tax penalties, right to pay tax, right to request special ruling and right to request offsetting and refund. It should be noted that the Turkish legislation provides the aforementioned taxpayer rights under the relevant laws, but the taxpayer rights are not systematically compiled and explained under the legislation yet.
Similar to the Handbook of the Turkish Revenue Administration, the Turkish Tax Inspection Board published a brochure on Taxpayer Rights and Obligations During the Tax Inspections dated 2016 and more importantly, formed a "Taxpayer Portal" where the taxpayers can obtain information regarding the relevant tax inspections conducted upon them by the Turkish Tax Inspection Board through the online platform. The taxpayers can also access to the inspection minutes as well as a summary of the official report through the portal. Likewise, important steps had been taken with regards to the development of taxpayer rights and expanding their use within the context of tax inspections. In particular, by virtue of the provisions set forth under the Law numbered 6009 and dated 2010, significant matters such as commencing the inspections by preparing the minutes of the inspection, completion of the inspection within a certain period of time, notifying the taxpayer of any request for additional time for the completion of the inspection have acquired legal ground. Furthermore, the Regulation on Amendment of the Regulation on Procedures and Principles to be Followed in Tax Inspections published in the official gazette dated 25 October 2016 introduced a new set of taxpayer rights in relation to the inspection process.
Another development on the taxpayer rights was inclusion of a section regarding taxpayer rights within the Draft Tax Procedure Law of 2016, however the draft has not been enacted to this day.
Why is the Taxpayer Rights Board necessary?
Following the OECD's incentives, the countries started to prepare legislations on taxpayer rights and to form tax ombudsman mechanisms independent from the relevant tax authorities which will hear the complaints of the taxpayers and advise to the tax authorities. United States, United Kingdom, Austria, Belgium, South Korea, South Africa, Italy, Japan, Canada and Australia are among the countries that have a tax ombudsman mechanism. In the United States example, following the Taxpayer Bill of Rights Acts of 1988 and 1996, the Taxpayer Advocate Service was created in 1996 and finally the Congress enacted the Taxpayer Bill of Rights as a section under the Internal Revenue Code in 2015. Although in Turkey, the Bill prepared by the Turkish Revenue Administration has not acquired a legal ground yet, formation of the Board is an important step to catch up with the global developments on taxpayer rights.
Based on the observations of the other countries' ombudsman mechanisms, it can be inferred that the Board will be an apparatus facilitating the defense and protection of the rights of the taxpayers and it will contribute to the resolution of disputes through reconciliation. Improvement of the dialogue between the tax authorities and the taxpayers and increase in the taxpayers' confidence on the tax authorities are essential to ensure the voluntary compliance with tax paying and to decrease the number of tax-related disputes. In this respect, establishment of the Board in pursuit of the World's trend, will help to facilitate these objectives by increasing taxpayers' confidence on the just functioning of the tax collection system.
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