GROWTH-FRIENDLY TAXATION AND TURKISH PRACTICE

Abstract

The aim of this paper is to discuss the essentials of growth-friendly taxation i.e. tax structures which promote economic growth and Turkish practice. This paper comprises two parts. In the first part the basis of growth friendly tax policy and guidelines set by European Union for tax reforms aiming to increase the quality of tax system. The second part will be devoted to the examination of major tax types of Turkish Tax System whether they represent growth friendly structure or not. It is observed that Turkey by having heavy income tax burden and wedge on labor particularly low wage earners, corporate income tax not allowing to subtract net return on equity capital, numerous tax reliefs and discriminative and multi-rated structure Value Added Tax (VAT) has not been implementing growth friendly tax system.