ISTANBUL BLOG: How one in four big companies in Turkey always state a tax filing loss

ISTANBUL BLOG: How one in four big companies in Turkey always state a tax filing loss
Odedigi Vergi ("The Tax He Paid): 0 Turkish lira. / Evrensel
By Akin Nazli in Belgrade August 5, 2024

Of the 2,815 large companies in Turkey, 735 always state a loss in their tax filing, the country's finance ministry confirmed on July 28 in a written statement provided in response to media reports.

On July 27, Turkish daily Evrensel reported that eight of 20 contractors, who received a total of Turkish lira (TRY) 190bn ($5.7bn) in public contracts not subject to tenders, paid no tax in 2023.

Erdogan regime officials have a “really good” sense of humour.

In Turkey’s public tender law, there is an infamous article, namely 21/b.

21/b allows the government to deliver contracts without holding tenders in the event of an emergency such as a natural disaster.

The regime simply delivers various contracts under 21/b without identifying what the apparent emergency was.

In 2019, journalist Cigdem Toker published a book entitled Kamu Ihalelerinde Olagan Isler (Ordinary Affairs in Public Tenders). The title is actually a reference to the "extraordinary conditions" specified in 21/b.

Daily Evrensel checked the tax records of the 20 contractors listed in the book.

It turned out that Tas Yapi was the "winner". It held the records for both receiving contracts under 21/b and not paying taxes.

Table by Evrensel: The first column shows the TRY amount of the contracts received under 21/b, while the remaining columns show the taxes paid in the last three years.

As of 2019, Tas had received TRY 29bn in contracts under 21/b and had paid zero in tax across the five years between 2019 and 2023.

Tas is owned by Emrullah Turanli. He is from Rize in the Black Sea region, as is Turkey’s president, Recep Tayyip Erdogan.

Evrensel also noted that 12 taxpayers identified by its research had paid modest amounts. For instance, Kolin, at TRY 22bn the second largest receiver of contracts under 21/b, paid around TRY 560mn tax in 2023.

Kemal Kilicdaroglu, the former leader of Turkey’s main opposition Republican People’s Party (CHP), dubs the Erdogan-affiliated leading group of Turkish contractors the “Gang of five”.

The five he refers to are Cengiz Holding (owned by Mehmet Cengiz), Limak Yatirim Holding (owned by Nihat Ozdemir), Kolin Insaat, Mapa Group (owned by MNG Group) and Kalyon Holding.

There are actually more than five Erdogan-affiliated businessmen but Kilicdaroglu’s “Gang of five” term has become a common idiom in Turkey for all the businessmen thought to be part of the group.

It should be noted that the CHP’s new management never speaks of Kilicdaroglu’s "Gang of five". The media that are pro-CHP, meanwhile, presently broadcast advertisements of the "Gang of five".

On July 19, Toker wrote in her column for T24 that the regime was planning to collect TRY 557mn ($17mn) in additional tax income by hiking the tax rate for contractors of public-private-partnership (PPP) projects to 30% from the current 25%.

A total of 44 highway, bridge and city hospital construction contractors will be affected by the change.

At the same time, in its 2024 budget, the government has allocated TRY 162bn in payments to the contractors in question.

The figures were shared by the government when its latest tax bill was sent to the parliament.

Later media reports suggested that 37 of the 44 contractors in question report no profit. So, the additional TRY 557mn will be collected from the remaining seven.

While we're dealing with all these fun facts, let's also mention the local media reports that suggest two family businesses, in which lawmaker Nilgun Ok has stakes, have paid no tax since 2019.

Ok has served as an MP of the ruling Justice and Development Party (AKP) since 2018.

The funny thing here (weep, if you wish) is that Ok's signature is the first you see on the latest tax bill, which came into effect on August 2.

The companies in which the other bill signatories, Canturk Alagoz and Refik Ozen, hold stakes have paid no tax across the last three years (no data is available for the prior years).

In his 2024 budget, Turkey’s finance minister Mehmet Simsek, who has lately been bringing in more price and tax hikes, has outlined how he aims to collect TRY 7.4 trillion in tax income this year.

He has also provided TRY 2.2 trillion worth of tax exemptions.

 

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