Tuesday, October 10, 2006

Turkish tax strategy

Turkey, like many countries was having a hard time getting their tax money in - and they came up with a pretty innovative strategy in my opinion.

Because they didn't have the trusted manpower to check the country's businesses' bookkeeping, they implemented a pull strategy by encouraging the consumer to pressure the business.

In a restaurant or shop, it was common practice not to receive the bill, to keep income off the books. So the government decided to refund a percentage of the VAT to individuals at the end of each year -provided they could show proof of expense- for purchased clothes, food, medical goods and school supplies among other things.

By asking for the bill and claiming a refund on part of the VAT she had paid on goods during the year, a friend of mine in Izmir was refunded about 400 YTL (about 200 Euros) per year. Not bad. I can think of a few things I'd rather do with that then spending it on VAT. And it's all in the interest of the country.

The system worked well, and so gradually the state has reduced the percentage of VAT they refund - perhaps a bit quickly in my opinion, for it will take a while for the tax evasion process to "un-become" the norm.

Now-days, although you still get asked if you want the bill or not (and get offered a discount in shops if you don't want it) a larger proportion of the population has gotten into the habit of automatically pressuring the business into good bookkeeping simply by asking for the bill.


Marko said...

I think there was something similar in Serbia. Not on an annual level, but the state would reward you for information on businesses that fail to issue a bill.
There was also a prize game, where you had to send a certain number of bills and if drawn could win an apartment, car or something. That started a frenzy for collecting bills, and there was no way you would leave the store without it.

Brooke said...

Oh this is brilliant! I always wondered why everyone is so forceful about giving me a receipt. Thanks for explaining.

bignose said...

Mieux le look du blog; nettement mieux... bientôt tu va me donner des leçons... les deux sont nettement mieux; plus lisibles et les différentes sections sont facilement lisibles sans lire (pratique). Bref good job

Adam said...

Interesting.....same concept is being applied in Thailand, though here they use some form of lottery system. I suspect this may come from the IMG bag of tricks. But here I don't see it working.........too corrupt.