Economy Turkey using AI in crackdown on corporate tax evaders By William Sellars October 15, 2024, 1:36 PM Alamy/Roger Bradley via Reuters Turkey is using AI to study the tax returns of hundreds of thousands of citizens and thousands of businesses AI in use on tax returns 500 inspectors to be deployed Up to $700m under-reported Turkey is to unleash hundreds of auditors and artificial intelligence technology on the country’s leading companies to identify those that are avoiding paying tax on earnings or that are downplaying their revenue to escape higher payouts. Up to 500 inspectors will be deployed in the first stage of a long term programme to stamp out corporate tax avoidance and close down the informal economy, treasury and finance minister Mehmet Şimşek told state news agency Anadolu Ajans on October 13. Initially, businesses in 31 of Turkey’s 81 provinces will be targeted, he said, with the scheme subsequently being expanded as resources became available. Along with the battalions of human auditors, Turkey will also use AI in its efforts to root out tax avoidance. Studies of the tax returns of hundreds of thousands of Turkish citizens were already being conducted using AI, Şimşek said, while up to 3,400 companies were also being surveyed by technology. Officials of those deemed to be at risk will be summoned for face-to-face interviews. Among the operations to be scrutinised will be social media revenue streams and the use of international Iban accounts instead of standard company bank accounts for money transfers, the minister said. Turkey has launched a series of investigations into the finances of social media service providers and influencers, and a number of well-publicised cases highlighted widespread under-reporting of incomes. According to Şimşek, even preliminary investigations suggested tax avoidance or under-reporting by large companies of close to $700 million. However, while it is likely the campaign will identify some tax problems among certain companies, economist professor Sadi Uzunoğlu of Trakya University is sceptical that the audit will generate much in the way of revenue for the budget. Turkey hits major Asian steel exporters with tariffs China files trade complaint against Turkey over EV tariffs Turkey SMEs bolstered by $2.3bn global funding Major businesses are generally audited and those listed on the stock exchange are also audited by the Capital Markets Board, the main supervisory and regulatory agency for security markets, he told AGBI. “The measures announced are for show and indeed miss what the real issues are in taxation,” Uzunoğlu said. “The main problem is the 20 percent top circle who are not taxed heavily and the large tax exemptions granted to some firms.” Although the government has said it will roll back many of the existing tax exemptions, and institute reforms to broaden the tax base as part of its medium-term economic programme announced in early September, Uzunoğlu said little has been done to enact these reforms to date. “The issue of the budget and taxes will be the subject of debate for a long time, and won’t be resolved with window dressing measures,” he said.