A transformation in taxation: Blockchain based taxation and its applicability in Turkish tax system

Nowadays, many digital transformation studies are implemented in the field of taxation. The majority of these digital transformations are in the form of acquiring data of taxpayers and monitoring this data in a database to be used in tax transactions. Keeping financial data in a central database makes it a target for malicious attacks. Blockchain technology proposed a significant solution to this problem by offering to keep such data decentralized in a distributed network. Blockchain is a distributed ledger in which transactions are cryptographically encrypted and stored in blocks over a network. In this regard, data can be stored on each computer in the network (node) and by this way data integrity and immutability are guaranteed. The processing of data into blocks in the chain is carried out by consensus of the nodes in the network that eliminates the need for a central authority or intermediary . As a result, the advantages proposed by this technology emerge as data immutability, transparency and traceability, mediation and efficiency. Our study starts with the definition of Blockchain technology, its features, advantages and disadvantages and fields of usage. Examples of countries that apply Blockhain technology to the field of taxation are also included in our study. Afterwards, its applicability to tax transactions in Turkey is mentioned. In this context, the potential implementation areas of this technology with regards to tax laws are addressed. Additionally, potential solutions to the problems experienced in Income Tax, Corporate Tax, VAT, SCT and Stamp Tax are also mentioned. When the acedemic studies about blockchain technology related with tax issues are examined, it is noticed that these studies are mostly conducted on the taxation of cryptocurrencies. However beyond being the basis of cryptocurrencies, the scope of this technology is quite wide. The originality of this paper is that this technology is detailed with potential usage areas and suggestions in terms of Tax Procedure Law, Income Tax Law, Corporate Tax Law, VAT, SCT and Stamp Tax Laws in the Turkish Tax System. In this respect, we tried to propose solutions to the problems seen in terms of these tax types.