Property Tax Efficiency in Turkey

The property tax system in Turkey that has proven itself in terms

of modern taxation principles is facing some structural problems. Foremost

among those structural problems is the issue of the determination of the tax

value. This problem, that causes increasing tax losses, can be resolved with

the introduction of a new tax valuation methodology. At this point the

current tax valuation method should be terminated and a commission

consisting of academicians and representatives from the real estate market

should determine the taxable value. In this way, property tax losses and

evasions will be reduced and municipalities’ revenues will be increase

markedly. Currently, in Turkey, some of the newly established

metropolitan municipalities have a lower level of development compared

to other metropolitan municipalities. If the relevant provisions related to

property tax are applied without discrimination among all metropolitan

municipalities, it is difficult to acquire property in the newly established

metropolitan municipalities. This will also create the problem of migration

to more attractive locations within the country. In this context, the

relatively low-rated property tax application, which is limited to a certain

period of time, will be useful in order to prevent this. Thereby, internal

migration problems will be solved efficiently, and interregional differences

of development will be reduced in the medium term. Consequently, in

parallel with the continued development in the real estate sector, there is a

real possibility of experiencing a marked development in property tax

efficiency over the next decade.