Tax clampdown on tradesmen

Melisa AY

The economy's administration is seeking new solutions to address the black hole in the budget, which it's trying to fill with tax revenue. The latest attempt is to patch the hole by changing the taxation method for small businesses. The AKP government and Treasury and Finance Minister Mehmet Şimşek have targeted small businesses. A new era has begun for small businesses and artisans operating in 30 metropolitan cities.

A Presidential Decree published in the Official Gazette narrowed the scope of simplified taxation. According to the decree, signed by AKP President Recep Tayyip Erdoğan, those operating urban passenger transport such as taxis, minibuses, and buses in 30 metropolitan cities, as well as hotel and restaurant operators and auto repair shops, will be taxed using the simplified tax method starting January 1, 2026. According to the Income Tax Law, the earnings of taxpayers taxed under the simplified method were not subject to annual tax returns.

Furniture makers, restaurants, cafes, amusement parks, transportation, lumber, and renovation contractors will also be subject to the tax in the real sense. The decree will exclude tradespeople operating in districts with a population of under 30,000 from the regulation.

NO TAX WITH A SINGLE SIGNATURE

Tax Expert Azmi Demirci noted that the practice violates universal taxation principles, saying, "Tax is levied on wealth, transfers, income, and spending. Taxi drivers, minibus drivers, tinsmiths… People struggling to make ends meet. Work has been underway for years, and the result is a situation that puts pressure on tradespeople."

Demirci emphasized that the AKP government has not taken effective steps to combat the informal economy, saying, "There are many areas in the country that are tax-free. The informal economy has reached 60 percent. They say, 'We will prevent it,' but there are no legal regulations or sanctions. Tons of money are unrecorded. You've legally kept capital income off the books; for example, there's no tax on interest or exchange rate fluctuations earned by individuals. People who are worried about how they're going to make a living are facing new burdens."

Demirci, emphasizing that current practices also undermine the taxation system, said, "According to the principle of legality in taxes, taxes are imposed and abolished by law. Now, everything is regulated by the President's decree. A single person regulates taxes. Those who earn their living are targeted, and capital income is either taxed at all or only for show. The stamp duty on tax returns was increased a few days ago, and tax continues to be collected from taxpayers. This way, tradespeople will submit returns every month; even if they submit blank returns, they will still pay stamp duty. This will not close the hole in the budget. For taxpayers to be a reliable public financing tool, fair taxation is necessary. Holding owners and retired civil servants pay the same tax on gasoline, and what's more, the owner is reporting it as an expense. This practice will force tradespeople to submit 20-30 returns a year. Tradesmen and artisans' professional organizations must speak out against this. As stated in the Constitution, 'paying taxes according to financial capacity' is essential." While 60 percent of the economy is unregistered, those who earn big money are left untaxed, and those who do not have capital and live by their labor are targeted.”