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Incentive for textile sector causes huge tax losses in fuel sales
The Anatolia news agency reported on Sunday that the Revenue Administration (GİB) had started investigations as it received numerous complaints that some fuel distributors and gas stations were adding these cheaper oil products to fuel as a way to evade taxes.
Estimates place the state’s loss from tax evasion in fuel and gas sales at up to TL 600 million per year.
The Finance Ministry included oil products on the list of products subject to the ÖTV through Law No. 5838, dated Feb. 28, 2009. The tax was determined to be TL 0.9345 per kilogram for motor oil and hydraulic oil.
This application was strongly criticized by the textile, thread, leather and paint manufacturing industries, which use mineral oil in production, on the grounds that the new taxes raised materials costs and hampered competitiveness in exports markets.
Upon their request, the Finance Ministry decided to lower the tax to TL 0.3 per kilogram of oil starting on July 15, 2009.
However, the policy backfired as fuel sellers exploited fraudulent methods to benefit from these lower taxes on oils and sell these oil products as fuel additives.
It is estimated that the quantity of mineral oil, including base oil and machine oil, sold in the domestic markets in one year is close to 800,000 tons. However, as the actual need for mineral oil is at most 500,000 tons a year, the remaining 300,000 tons are thought to be sold mixed with fuels.
It is likely that nearly 170,000 tons of waste oil emanate from the use of 500,000 tons of mineral oil per year. However, the quantity of waste oil registered in the state’s records is only 35,000 tons, which means that between 150,000 tons and 170,000 tons of waste oil are mixed with diesel and gasoline at fueling stations.
Petroleum Industry Association (PETDER) Secretary-General Erol Metin also points to the emergence of unfair competition in the sector due to the sale of oil products mixed in fuels. Furthermore, the impact of this application on human health and the environment must not be neglected, he added.
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