To Analyse and evaluate the agricultural sector from the points of the income tax and value added tax in Turkey and European Union

ABSTRACTAgriculture has a very important role in the European Union Policies.The most important policy in European Union (EU) is The CommonAgriculture Policy. The countries that will be the member of European Union(EU) must be accommodated to The Common Agriculture Policy. InEuropean Union (EU) the highest level of financial aid is extended to theagriculture sector of the member countries. European Agricultural Guidanceand Guarantee Fund (EAGGF) have been established for giving financial aidto the member countries. In Turkey?s full membership procedure to EuropeanUnion (EU), the most important topic is going to be argued in accessionnegotiations will be agriculture sector. In general the share of agriculture intotal economy in member countries is very small. But in Turkey, agriculturehas become more important. In addition, the taxation of agriculture inEuropean Union (EU) member countries and in Turkey is outweighed.Income Tax Act and Value Added Tax impose Turkey?s agriculturesector. In Turkey the most important regulation in tax laws has been done in1961. Second important changes in tax laws have taken effect on January 1st, 1998. The withholding taxation method in agriculture has come into forcevery effectively with these regulations. The taxation method of declaration iscontinuing. But most of the agriculture taxpayers are imposed the withholdingtaxation method. The rate of value added tax on agricultural products is %1which is less than the standard tax rate. On the other hand excise tax andmotor vehicle tax are not imposed on agricultural and forest tractors that areused very common in agricultural procedure in Turkey.287In spite of there is a common agricultural policy there is no commontaxation system for agriculture sector in European Union (EU). The taxationof agriculture has lots of differences for every member country. Thesedifferences are becoming more pronounced especially for income tax. Thereis no harmonization on direct taxes in European Union (EU). In value addedtax an adjustment is applying according to 6. Directive of European Union(EU) and the agricultural sector is taxed with a value added tax rate less thanthe standard value added tax rate.The number of agricultural taxpayers has a great share in totalnumber of taxpayer in Turkey. In spite of this fact, total tax revenues ofagricultural taxes have a small share in total tax revenues. The reasons ofthis conflict are withholding taxation system and unregistered economy. Toprevent unregistered economy, the premium system for farmers should putinto practice. The financial aid should be given to agriculture sector, as is thecase in European Union (EU) but at the same time agriculture sector shouldbe taxed.