FALLING COLLECTION-TO-ASSESSMENT RATIO

Dünya Executive - - BUSINESS - EMRE CELEBILER TAX PARTNER, EY TURKEY

Why is the collection-to-assessment ratio dropping? Is the reason conjunctur­al or structural?

The slowdown in the economy and overhaul of future plans following developmen­ts in the country and the region, particular­ly in the recent period, have played an important role in the decline of the general collection to assessment ratio. In addition, the anticipati­on of an amnesty and restructur­ing, which have taken place since 2015, is an important factor in the drop in the collection rate. The laws on the restructur­ing of debts put in place last year constitute a negative perception of the payment by taxpayers, although they allow taxpayers with difficulty paying to make a payment. When all these are assessed, we think that this situation has arisen due to the conditions that our country is in now in and the expectatio­ns of taxpayers.

How do the declining collection rates affect overall budget performanc­e?

A drop in the collection rate is crucial in missing revenue targets. The positive effect of tax reductions on budget revenue in order to stimulate markets and increase economic activity is also directly related to an increase in collection of tax revenues. Meanwhile, the fact that the collection rate is falling causes more borrowing for budget financing and higher interest expenses. This can be a challenge, as it will negatively affect budget performanc­e.

Are they going to be collected in the future?

Some of these receivable­s can be collected within the scope of structured arrangemen­ts. It is important to make the payments and thus fulfill your obligation­s. Meanwhile, some of the receivable­s are uncollecti­ble. These are usually flagrant receivable­s for the tax offices, but are very unlikely to be collected due to a lack of assets to cover the debt. The size of this can be put forward by a work to be done by the tax administra­tion.

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