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from ZAMAN newspaper:

Tax evasion rampant in estate sales to foreigners

Inspection of real estate sales has revealed tax fraud on 60.3 percent of total property sales to foreigners, and the Treasury has so far collected YTL 52.1 million by demanding payment from tax evaders.

Ministry of Finance Auditing Board Chairman Mahmut Vural noted on Monday that the monitoring of estate sales to foreigners began in accordance with the 2007 Main Operation Plan approved by Finance Minister Kemal Unakıtan.

These inspections will continue in cities such as Antalya, Alanya, Didim, Kuşadası and Bodrum, where foreigners purchase the most property. The ministry’s Account Expert Board’s (HUK) Research, Development and Risk Analysis Center is conducting a detailed inquiry to reveal those selling or acting as intermediaries for sellers.

Information provided by the Land Registry Office and the Revenue Administration was analyzed along with bank transfer records for foreigners sending money to real estate agents in Turkey.

As the transfer information targeted taxpayers in the cities under the inspection, the amount people received in transfers and amounts paid to construction companies were matched. The inquiry showed that most of these people are either real estate brokers or lawyers working as intermediaries. Those people who claimed self-employment on excess earnings also had their finances inspected.

The information has been sent to account experts participating in the inspections.

Unofficial cash payments

Account experts involved in the inspections have made local inquiries on the spot and clarified the list of the taxpayers to be inspected. Experts discovered that most sales are handled by lawyers and real estate brokers.

It also turned out that real estate brokers and lawyers obtain large cash payments in hand aside from payments through the banking system and don’t honor their tax obligations for many of these transactions.

When some of these intermediaries failed to provide information or documentation, financial officials took legal action.

Inspection figures showed that the amount of property sold to foreigners was declared to be YTL 109.233 million, while YTL 69.808 million went undeclared. In Antalya, 38.98 percent of sales revenue was not officially declared.

The amount of untaxed money in real estate transactions soared in Alanya with 72.41 percent. According to inspections in this city, YTL 326.410 million worth of real estate was sold to foreigners, whereas only YTL 90.052 million was officially acknowledged.

The amount of money undeclared in Didim, Kuşadası and Bodrum was YTL 92.628 million, YTL 17.220 million and YTL 21.158 million, respectively -- 59.11 percent, 62.69 percent and 60.69 percent of total sales.

Vural stated that most of the companies dealing with large construction projects are from İstanbul or Ankara and that their inspections will be conducted throughout 2007 and 2008. “Eighty-eight taxpayers were checked within this process. In contrast to their YTL 287.3 million tax base, a difference of YTL 437.2 million was found,” he added.

Looking at the inspection results, taxpayers declared only 36.95 percent of their revenue from property sales, failing to pay taxes on 60.35 percent.

28.08.2007