Turkish Daily News

June, 2010

Tax audits conducted by inspectors of the Turkish Revenue Administration against factoring firms have revealed widespread tax evasion in the sector.

Factoring is a financial transaction whereby a business sells its accounts receivable, such as invoices, to a third party at a discount in exchange for immediate money with which to finance continued business.

The inspectors started a sector-wide examination on factoring companies three years ago. The study encompassed 54 companies and concluded recently with 149 reports. 

The audits determined a tax base difference of 681 million Turkish Liras in total, which revealed that many factoring companies concealed a huge amount of revenue and evaded paying taxes fully. The inspectors calculated 84.4 million liras of tax difference for the mentioned tax base. They also fined the companies 83.3 million liras in total.

According to inspector reports, over 32.33 million liras in tax evasion is attributed to Kurtulus Factoring, owned by Salvo Taragano who ranked second in this year’s income tax champions list.

Revenue inspectors focused on the 2008 fiscal period and found a 19.6 million-lira tax base difference in terms of corporate tax. At the same time, the controllers issued over 3.9 million liras of extra corporate tax on the company, in addition to a fine for tax evasion.

The report concerning corporate taxes said Kurtulus Factoring evaded taxes by excluding some revenues, such as interest and commissions, from the income statement.

The inspections on the company in terms of bank and insurance operations found a tax base difference of 12.7 million liras in the January-September period, for which a 634 million-lira banking insurance process tax was issued.

The company, which currently is in a process of liquidation, asked for negotiations from the Finance Ministry. The negotiations resulted in the reduction of the extra corporate tax to 2.2 million liras and of the banking insurance process tax to 440,000 liras. The overall tax evasion fine levied on the company was cut to 150,000 liras.