The Effect of Tax Penalties on Tax Compliance in Türkiye: A Provincial Level Analysis

Abstract

According to the Allingham-Sandmo model, which explains the relationship between tax penalties and tax compliance, the factors affecting the tax compliance of a rational individual are tax penalties, audit probability, income level and tax rate. In this study, the effect of tax penalties on tax compliance in T & uuml;rkiye is examined based on this approach, using data from the period 2007-2023 on a provincial basis. The findings from the dynamic panel data analysis show that accrued tax penalties negatively affect tax compliance, while the effect of collected tax penalties is positive. It is also determined that the tax burden of the provinces does not have a significant effect on tax compliance. As the share of direct taxes in tax revenues increases, tax compliance is negatively affected, and as the real per capita income increases, tax compliance increases.