A majority of Turkey’s real estate and construction companies are not paying taxes because they declare no profits, the Kısa Dalga news website reported, citing data from the Central Bank of Turkey.
The central bank’s sectoral balance sheets for 2022 revealed that 65.2 percent of real estate companies and 51.7 percent of construction firms reported losses or no profits, thus avoiding tax payments. This data, covering 983,182 companies, indicates that over half of the companies in 10 out of 17 sectors reported losses or no earnings.
These findings have led to accusations that many companies are falsely declaring losses to evade taxes. The construction sector, which has seen substantial growth over the past two decades due to lucrative government contracts, is notably implicated. Of the 19,745 real estate companies, 12,236 declared losses, while 635 reported no profits, thus not paying taxes.
The Finance Ministry has previously acknowledged the problem and pledged to implement policy changes. The ministry plans to eliminate certain tax exemptions and introduce a minimum 10 percent corporate tax on profits for companies previously benefiting from these exemptions.
The ministry’s statement further revealed that only 27 percent of 2,815 major taxpayers had undergone tax audits. In response the ministry vowed to increase audit frequency, particularly targeting companies that consistently report losses. Audits are already underway for 735 high-risk taxpayers.
Prominent corporations, including telecom giants Turkcell and Türk Telekom, have faced allegations of tax evasion while imposing multiple fees on consumers. These revelations have fueled public frustration, with many questioning the fairness of the tax system.
The ministry’s admission has put a spotlight on the tax practices of Turkey’s largest corporations, including construction and telecom giants. Companies like Taş Yapı, Yapı & Yapı, and Trendyol have been named among those that have paid little to no taxes despite substantial earnings from government contracts and other operations.
Selçuk Bayraktar, son-in-law of President Recep Tayyip Erdoğan and head of Turkey’s drone manufacturer Baykar, has also come under fire for his company’s tax practices. Bayraktar’s company has benefited from the status of a special industrial zone, which grants significant tax exemptions and incentives. A recent court case revealed that Baykar was granted this status by presidential decree, which allows the company to operate in an area where all land is either owned by Baykar or leased from the state on favorable terms. The Ministry of Industry and Technology confirmed that infrastructure costs within these zones are covered by the government and that companies are exempt from various taxes.
The revelations have sparked further controversy as Bayraktar’s company was among those highlighted in a report by the BirGün newspaper, which claimed that pro-government companies were receiving preferential treatment. Bayraktar responded by filing a defamation lawsuit against the newspaper and its journalist, claiming that the report had damaged his reputation. However, the Ministry of Industry and Technology’s confirmation of Baykar’s special status has raised questions about the transparency and fairness of such arrangements. Critics argue that these practices contribute to a wider problem of unequal tax burdens in Turkey, where ordinary citizens bear a greater burden, while well-connected companies receive significant tax breaks.