Problem of exceeding the tax base in the digital economy and its evaluation in terms of Turkey

İn recent years, the digital economy has grown rapidly and become a vital component of the global economic system. However, one of the most significant challenges emerging from this new structure is the issue of tax base erosion. Tax base erosion primarily occurs when multinational enterprises operating on digital platforms avoid local tax regulations by channeling their profits to jurisdictions with low tax rates. This situation has led to declining tax revenues and growing tax inequities in both developed and developing countries. With the expansion of the digital economy, the increase in online trade and digital services has revealed the inadequacy of traditional taxation systems. Digital platforms transcend physical borders and reach global markets, yet the majority of the income they generate is often accumulated in low-tax jurisdictions where tax obligations are minimal. For instance, large digital corporations operating in sectors such as social media and online retail typically report their revenues through subsidiaries located in tax havens, thereby avoiding taxation in the countries where they conduct substantial business activities. This trend adversely affects national tax revenues and hinders the financing of essential public services. Turkey is among the countries confronting the challenge of tax base erosion in the digital economy. The Turkish tax framework contains various gaps that need to be harmonized with the dynamics of the digital economy. The rapid growth of digital services and e-commerce has made effective tax auditing increasingly difficult. In response to these global developments, the Organisation for Economic Co-operation and Development (OECD) published 13 final reports in 2015 under the Base Erosion and Profit Shifting (BEPS) project, providing comprehensive guidelines on addressing these issues. Although the BEPS Action Plans do not constitute legally binding rules for OECD member states, they serve as essential references for domestic legislative reforms. In alignment with the BEPS framework, Turkey has implemented several amendments to its tax legislation and introduced specific tax regulations targeting large corporations generating income from digital platforms. Since 2020, the Digital Services Tax has been in effect. Furthermore, within the scope of the BEPS 2.0 initiative, on October 8, 2021, the "Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy" was endorsed by 136 countries. This agreement represents a global commitment to a new international corporate tax regime applicable to multinational enterprises, including small and medium-sized entities. Under this framework, participating countries will be able to apply their respective tax rates and levy corporate taxes accordingly. One of the key proposals, the "Global Minimum Tax," was officially approved during the G20 Summit held in Italy on October 30–31, 2021. Nevertheless, despite these advancements, multinational corporations continue to exploit low-tax jurisdictions, and compliance with international tax obligations remains insufficient. This study examines the issue of tax base erosion in the digital economy, focusing on Turkey's current tax regulations and reforms targeting digital services. It emphasizes the necessity of enhancing tax policies concerning the digital economy, strengthening international cooperation, and adopting uniform global tax standards. The digital economy challenges the boundaries of traditional tax systems and calls for more robust national and international taxation frameworks. In this context, it is crucial for Turkey to develop more effective and sustainable tax policies addressing the realities of the digital era. Keywords: Digital Economy, Tax Base Erosion, Turkish Tax Legislation, Digital Services Tax, BEPS 2025, 121 pages