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Tek sunum 10 09-2013-v4

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  • 1. Combatting Shadow Economy - Turkish Experience September 10, 2013 Mehmet Şimşek Minister of Finance
  • 2. Outline Why Combat Shadow Economy? Fighting Shadow Economy Progress 2
  • 3. Why Combat Shadow Economy? Create a Level Playing Field Increase Competition in Domestic Markets Enhance Productivity and Innovation Improve Competitiveness in World Markets Minimize Tax Evasion & Increase Social Welfare 3
  • 4. Fighting Shadow Economy 4
  • 5. Factors that help Reduce Shadow Economy Lower Tax Rates Improving Quality of Institutions The Action Plan 5
  • 6. Lower Tax Rates 6
  • 7. Reducing Tax Rates, Supporting Employment and Investments Lowered Tax Rates 7
  • 8. Total Tax Burden (% of GDP, 2011) 17 22 27 32 37 42 47 52 Denmark Sweden France Belgium Finland Norway Italy Austria Netherlands Luxembourg Germany Slovenia Iceland Hungary UK CzechRep. OECD-Avrg. Estonia Israel Poland NewZealand Spain Portugal Greece Canada Slovakia Switzerland Ireland Japan Turkey Korea Australia USA Chile Mexico 48.1 44.5 44.2 44.0 43.4 43.2 42.9 42.1 38.7 37.1 37.1 36.8 36.0 35.7 35.5 35.3 34.0 32.8 32.6 31.7 31.7 31.6 31.3 31.2 31.0 28.8 28.5 27.6 27.6 27.4 25.9 25.6 25.1 21.4 18.8 Source: OECD, Ministry of Finance 8
  • 9. Tax Burden on Income and Earnings (% of GDP, 2011) (including Social Security Contributions) 7 12 17 22 27 32 Norway Denmark Belgium Finland Italy France Austria Sweden Germany Netherlands Luxembourg CzechRep. Slovenia Spain Iceland OECDAvrg Switzerland Japan UK Canada Estonia Hungary Slovakia Poland USA Portugal Greece NewZealand Ireland Israel Australia Korea Turkey Chile Mexico 30.6 30.4 29.5 28.0 27.2 26.8 26.6 25.9 25.2 24.9 24.3 22.7 22.3 21.0 20.6 20.4 20.0 19.9 19.6 19.3 18.7 18.5 17.6 17.5 17.5 17.4 17.2 16.8 16.1 15.4 14.6 13.9 13.1 9.9 8.3 Source: OECD, Ministry of Finance 9
  • 10. Reduced corporate tax rate to 20% from 30% Corporate Tax 10
  • 11. Tax Burden on Corporate Income (%, 2012) 17 22 27 32 37 42 47 52 57 62 TURKEY2002 France Denmark USA UK Korea Belgium Spain Portugal Germany Sweden Ireland Norway Canada Israel Australia Japan Austria Netherlands Luxembourg Italy Finland Chile Greece Switzerland Iceland Slovenia Poland Turkey NewZealand Hungary CzechRep. Mexico Estonia Slovakia 65 59 57 52 51 51 50 49 49 49 48 48 48 48 48 47 46 44 44 43 42 41 40 40 37 36 36 34 34 33 32 31 30 21 19 Source: OECD, Ministry of Finance Turkey is the 7th country with lowest tax burden 11
  • 12. Lowered highest tax rate to 35% from 49.5%, and Lowest tax rate to 15% from 22% Personal Income Tax 12
  • 13. Highest Rates of Income Tax Bracket (%, 2012) 12 17 22 27 32 37 42 47 52 Netherlands Austria Belgium UK Sweden 2002Turkey Israel Portugal Australia Germany Greece France Italy Ireland Slovenia Chile Japan Luxembourg Korea Turkey USA NewZealand Poland Iceland Spain Mexico Finland Canada Norway Estonia Denmark Slovakia Hungary CzechRep. Switzerland 52 50 50 50 50 50 48 47 45 45 45 45 43 41 41 40 40 39 38 35 35 33 32 32 31 30 30 29 26 21 20 19 16 15 13 Source: OECD, Ministry of Finance 13
  • 14. Lowest Rates of Income Tax Bracket (%, 2012) 0 5 10 15 20 25 30 Belgium Italy Iceland Turkey2002 Estonia Ireland UK SlovakRep. Poland Hungary Slovenia Canada CzechRep. Turkey Norway Spain New… Portugal Israel USA Korea Chile Japan Denmark Netherlands Mexico Australia Austria Finland France Germany Greece Luxembourg Sweden Switzerland TurkeyMSA 25.0 23.0 22.9 22.0 21.0 20.0 20.0 19.0 18.0 16.0 16.0 15.0 15.0 15.0 13.8 12.8 11.5 11.5 10.0 10.0 6.0 5.0 5.0 4.7 2.0 1.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 With the Minimum Subsistence Allowance, Income tax rate is zero for a wage- earner with four children and an unemployed spouse. Source: OECD, Ministry of Finance 14
  • 15. Burden on Average Wage* (%, 2012) 15 0 5 10 15 20 25 30 35 40 45 Fransa Yunanistan AGİÖncesi… Belçika İtalya Avusturya İsveç Finlandiya Türkiye İspanya Almanya Macaristan Estonya Hollanda Norveç Polonya İngiltere Danimarka Portekiz OECDOrtalaması Slovakya Japonya Slovenya İzlanda ÇekCum. Meksika Kore ABD Kanada Avustralya İsrail Lüksemburg İsviçre Şili İrlanda YeniZelanda 43.1 43.0 42.7 41.4 38.3 38.0 37.5 37.3 37,2 35.4 34.2 33.6 32.3 32.0 31.3 29.6 27.9 27.8 26.9 26.1 25.8 25.5 22.8 22.7 20.7 19.0 18.5 18.4 18.2 16.5 15.1 13.3 9.5 7.0 6.4 0.6 Source: OECD, Ministry of Finance * Calculated for a married wage-earner, with 2 children, according to updated average wage. France Greece Turkey,BeforeMSA Belgium Italy Australia Sweden Finland Turkey Spain Germany Hungary Estonia Netherlands Norway Poland UK Denmark Portugal OECDAvrg. Slovakia Japan Slovenia Iceland CzechRep. Mexico Korea USA Canada Australia Israel Luxembourg Switzerland Chile Ireland NewZealand
  • 16. Reduced default interest and deferment interest rates Default Interest Rates Monthly Annual 2002 7 84 2012 1,4 16,8 Point Change (-) 67,2 Deferment Interest Rates Annual 2002 60 2012 12 Change Rate (%) (-) 48 16
  • 17. VAT Rates (%, 2013) 14 16 18 20 22 24 26 28 Macaristan Danimarka İsveç Romanya Finlandiya Yunanistan Polonya Portekiz İrlanda Letonya Belçika Litvanya İtalya ÇekCumh. Hollanda İspanya Avusturya Estonya Slovenya Bulgaristan Slovakya İngiltere Fransa Almanya Malta TÜRKİYE G.KıbrısRumK. Lüksemburg 27 25 25 24 24 23 23 23 23 21 21 21 21 21 21 21 20 20 20 20 20 20 20 19 18 18 18 15 Source: OECD, Ministry of Finance 8% for education, health, clothing, tourism 1% in some food products 17 Hungary Denmark Sweden Romania Finland Greece Poland Portugal Ireland Latvia Belgium Lithuania Italy CzechRep. Netherlands Spain Austria Estonia Slovenia Bulgaria Slovakia UK France Germany Malta TURKEY GreekCypriotAdm. Luxembourg
  • 18. Improving Quality of Institutions 18
  • 19. Revamped Tax Audit Board 19 Tax Audit Board Board of Specialized Accountants Finance Inspectors Revenue Controllers Tax Control Officers
  • 20. Revamped Tax Audit Board 20 Small & Medium- Sized Taxpayers Large Taxpayers Combatting Organized Tax Crimes Transfer Pricing
  • 21. We introduced Risk Analysis Systems 21
  • 22. Improving Quality of Services Receiving 99% of income tax returns electronically through the e- Declaration system. Enabled the tax-payers to make their payments electronically Launched Tax-Payer Feedback System Created business electronic audit book and electronic registry center Launched electronic audit and inspection systems Identify the taxable activities of tax-payers on site through Electronic Pre-Audit System 22
  • 23. Adopted an Action Plan 23
  • 24. Action Plan for Combatting Shadow Economy 2011-13 24 5 Objectives 15 Institutions 47 Actions
  • 25. Action Plan 25 Objectives  Increasing Voluntary Compliance  Strengthening Audit Capacity  Increasing the Deterrence of Sanctions  Increasing Compatibility of Database  Raising Public Awareness Monitoring and Assessment  The High Council for Combatting Shadow Economy (Annual meetings)  The Council for Monitoring and Steering (Semi- annual meetings)  The Executive Council (Quarterly meetings)
  • 26. 26 Simplification of Documents 24 tax forms and guides have been simplified Action Plan Combating Informal Employment 1,500 audit officers and assistant audit officers have been hired
  • 27. 27 Action Plan Electronic Invoice Already compulsory for fuel oil, mineral oil, tobacco and alcoholic beverage businesses System will expand to all other sectors in the medium-term.
  • 28. 28 Synchronization of Devices • Taxpayers using mobile EFT-POS devices have to use POS machines that have been synced to the cash register by October 1, 2013. • All businesses have to use EFT-POS devices by Jan 1, 2016. Action Plan
  • 29. 29 Action Plan International Standard Classification of Occupations Employers are required to report the occupations of their employees according to the codes of the International Standard Classification of Occupations
  • 30. 30 e- Cooperative System Building co-operatives have been registered and monitored by Ministry of Environment and Urbanization. An access to this system has been granted to Revenue Administration and Social Security Institution. Action Plan
  • 31. 31 Monitoring of Construction Sector Building Surveyors and other actors in the construction sector have been registered and are being monitored by Ministry of Environment and Urbanization Members of the System Number of Building Audit Institutions Number of Inspectors Number of Controllers Number of Assistant Controllers Number of Construction Supervisors Project Number of Contracting Companies 1,657 24,365 30,023 4,158 43,102 166,753 Action Plan
  • 32. 32 Electronic Registry of Deeds & Cadastral Information System (TAKBİS) has been completed by Ministry of Environment and Urbanization. All transactions have been recorded in electronically. Access has been granted to Revenue Administration and Social Security. Action Plan Free Zones All commercial activities of free zones are now electronically recorded. An access to the Free Zone database have been granted to Financial Crimes Investigation Board (MASAK) and Revenue Administration.
  • 33. 33 Business Audit Book and Electronic Business Registration Center including the information that serves as the basis for business and sector analysis, have been formed for the use of audit officials. (Ministry of Labor and Social Security) 1,094 inspectors have access to the system Action Plan New Arrangement for Subscription of Natural Gas and Electricity Application to natural gas and electricity now requires taxpayer registration for all users
  • 34. 34 Risk Analysis Center Risky sectors will be supervised based on Social Security and other institutions’ database. Action Plan
  • 35. 35 E-Commerce A software package, acquired from Netherlands’ Revenue Administration, is about to come on board Action Plan Web Site www.kayitliekonomiyegecis.gov.tr for raising public awareness. Results of the Action Plan have been published on this website on quarterly basis.
  • 36. Action Plan • Executive Committee has been meeting regularly on quarterly basis • Holding press conferences on progress reports regarding combatting shadow economy • Progress reports are published on the web Sharing Information on Progress 36
  • 37. Progress 37
  • 38. Turkey: Size of Shadow Economy 32.2 31.5 30.7 30.4 29.1 28.4 28.9 28.3 27.7 27.2 26.5 26 27 28 29 30 31 32 33 200 3 200 4 200 5 200 6 200 7 200 8 200 9 201 0 201 1 201 2 201 3 Source: Schneider, 2013 38 SizeofShadowEconomy(%,GDP) 6 percentage points decrease since 2003!
  • 39. Tax Loss (% of GDP) 7.8 7.3 7.4 7.5 7.5 7.1 6.8 6.3 5.7 5.3 5.3 5.7 3.6 3.4 3.4 3.4 3.5 3.4 3.3 3.1 2.9 2.6 2.5 2.8 2 3 4 5 6 7 8 9 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Turkey Average of 38 Countries Tax loss rate is 3 points above the EU average in Turkey Source: Schneider, 2012 39
  • 40. Informal Employment Source: TÜİK 40 51.7 36.4 35 40 45 50 55 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 (%,TotalEmployment)
  • 41. Targets in Combating Shadow Economy Source : Schneider, 2013 41 SizeofShadowEconomy(2013,%,GDP) EU Average in Medium-Term Lowest levels in EU in Long-Term
  • 42. Productivity: Priorities & Reform Agenda Enhancing Competition Deepening Capital Markets Education Improving Labor Market Flexibility Local & Renewable Energy Infrastructure Moving up the Value-Chain Narrowing Regional Development Gaps 42
  • 43. Determinants of Long-Term Growth Quality of Institutions Demographics Productivity 43
  • 44. Improving Quality of Institutions Doing Business Corruption Perception Index Global Competitiveness Index Human Development Index OECD-FDI Regulatory Restrictiveness Index Past Present 2023 Source: WB, WEF, Transparency International, OECD 44
  • 45. Favorable Demographics Source: Eurostat Shareof15-24yearsoldinTotalPop.(%) 16.8 7 9 11 13 15 17 19 21 Andorra Italy Greece Spain Portugal Germany Slovenia Ireland Bulgaria Luxembourg Switzerland Croatia Czech Republic Austria Liechtenstein Serbia Hungary Netherlands Finland France Denmark United Kingdom Norway Sweden Estonia Ukraine Malta Poland Latvia Slovakia Montenegro Lithuania Iceland Macedonia Georgia Turkey Moldova Azerbaijan 45
  • 46. 2.0 1.0 0.3 0.7 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 Turkey USA EU-27 OECD AnnualAveragePopulationGrowthRate (%,2001-11)Growth Rate of Working-Age Population Source: OECD, Eurostat, TURKSTAT 46
  • 47. Long-Term Targets: GDP Source: TurkStat, Medium-Term Program, PwC 2002 2050 National income 230 billion USD in 2002… National income 5 trillion USD by 2050… National income 786 billion USD in 2012… National income 2 trillion USD by 2023… 47
  • 48. Long-Term Targets: GDP per Capita Source: TURKSTAT, Medium-Term Program,PwC 2002 2050 2002 $ 3,492 2012 $10,504 2023 $ 25,000 2050 $ 50,000 48
  • 49. THANK YOU! 49