Tax auditing in Turkey during the 2005-2023 period: Performance evaluation using multi-criteria decision-making method

In modern tax administration, the auditing mechanism is evolving beyond traditional tax collection and control functions, shifting towards a data analytics and risk management-based approach. During this transformation, measuring and evaluating the effectiveness of tax audits has gained importance. This study examines the performance of tax audits in Turkey between 2005 and 2023 using the VIKOR analysis, a multi-criteria decision-making method. The effectiveness of tax auditing is considered one of the key indicators of a country's fiscal sustainability. The rise of the digital economy and the increasing complexity of global trade have necessitated the restructuring of tax auditing systems. In this context, the study aims to provide a systematic performance analysis, focusing particularly on the impact of risk-based auditing approaches and technological transformation on tax audits. The research uses nine key performance criteria: tax revenues, the number of audits, audit rate, assessment/collection ratio, tax base differences, tax collection cost ratio, the number of settled cases, the rate of informal employment, and the total number of taxpayers. These criteria are widely accepted in the literature and frequently used in international practices. Each criterion represents a different aspect of tax auditing, and when considered together, they offer a comprehensive analysis framework. The results of the VIKOR analysis reveal three distinct periods in tax audit performance. The period between 2013 and 2016 showed the highest performance, with 2015 (Q_i= 0.28000) and 2014 (Q_i = 0.29398) standing out as the most effective years. During this period, positive developments such as a decrease in tax collection cost ratio, a reduction in informal employment, and an increase in the number of audits were noted. However, a significant decline in performance occurred starting in 2017. The years 2017 (Q_i = 1.00000) and 2018 (Q_i = 0.93131) recorded the lowest performance values. During this period, the audit rate dropped to 1.68%, the number of settled cases fell to 43,895, and the assessment/collection ratio decreased to 82.3%. In the 2020-2023 period, the performance of audits fluctuated, partly due to the impact of the Covid-19 pandemic. The findings of the study indicate that comprehensive reforms are needed in the tax audit system. Developing risk analysis systems, utilizing artificial intelligence-assisted audit tools, and expanding data mining applications are identified as technological priorities. Enhancing the settlement mechanism and improving the quality of taxpayer services are also seen as important for improving tax-taxpayer relationships.