The role of the practice of witholding tax in preventing tax losses and a comparison of EU countries with Turkey

Witholding tax is a tax collection method which reduces the time between getting income and taxation. Taking tax through witholding tax means taxation of income in its source.In addition to being used as a collection method witholding tax has also been used as a taxation technique. In such conditions, a tax declaration is not given for incomes that are subject to witholding tax and these incomes are not included even if a tax declaration is made for other incomes.Witholding tax has been a preferred practice because of several reasons such that it expedites collection, makes collection easier for tax bureaux, frees taxpayers from formal responsibilities, and prevents tax loss. Therefore, the practice area of witholding tax has been constantly broadened by regulations.Because of the developments in the globalization process countries face problems in taxation practices. New possibilites that occur in this process creates opportunities for taxpayers to avoid taxes or to evade taxes. This constitutes a significant problem in the agenda of both developed and developing countries. Besides taking different security precautions to struggle against tax losses, countries can also use witholding tax to prevent defrauding tax.Due to its many advantages, the practice of witholding tax is included in the tax systems of European Union countries even though it is not as widely practiced as in Turkey.