The analysis of tax evasion, tax avoidance and tax audit in Turkey and the European Union

Taxes were initially introduced to be able to provide certain public services that required state intervention and thus, formed the most fundamental economic bond between the state and its citizens. Although today taxes do not constitute the only source of income to provide for these services, they continue to be the largest and the most reliable source for finance. Therefore, all decisions pertaining to the collection, allocation, and supervision of taxes can be considered to determine economic and social development, and as such, have become the subject of important negotiations in the EU admission process of Turkey, which became a EU candidate state with the 1999 Helsinki Summit.The prerequisite for any state to continue the effective and efficient use of tax instruments is to establish the necessary conditions for tax compliance, which can reduce tax losses to a minimum. Within this framework, the aim of this dissertation is to compare and contrast the conditions related to the tax experiences and applications of Turkey and those of European Union states, and to shed light on the causes and effects of tax evasion and tax avoidance. To this purpose, the basic factors underlying tax payers? reaction to taxes, and the policies implemented by tax administrations will be examined with a focus on their possible short and long term effects on different variables. A multi-dimensional analysis of the tax applications in Turkey and in the European Union reveals that although the institutional structure of the tax administration of Turkey has been harmonized with that of the EU, due to administrative and political weaknesses in the implementation of policies as well as the particular structure and vulnerability of the Turkish economy, it has not yet achieved the level of success attained in the EU.