Turkey: AI system misclassifies money transfers as taxable rental income
Turkey's Revenue Administration deployed an AI system for automated tax audits that reportedly misclassifies money transfers marked 'other' in online banking as taxable rental income, resulting in multiple citizens receiving erroneous tax notices. A tax expert indicated the system lacks proper verification procedures and suggested affected parties file appeals while awaiting corrective measures from the authority.
What happened
Turkey's Gelir İdaresi Başkanlığı (Revenue Administration) deployed an AI system to conduct automated tax audits. The system classifies money transfers flagged with the 'other' (diğer) description in online banking as potential rental income.
Tax expert Murat Bal stated that the AI system detects transfers marked 'other' and categorizes them as high-risk, interpreting them as possible rental income. He reported that many people received tax notices (e-tebligat) as a result, including those who mistakenly selected 'other' when sending money to family members.
Reported impact
People who received money transfers with the 'other' description can face tax penalties months or years later, according to the reports. Multiple individuals reportedly received tax notices due to this misclassification.
Index analysis
The AI system's filtering mechanism appears to automatically flag all transfers with 'other' descriptions as rental income without verifying the actual nature of the transfer. Tax expert Murat Bal noted that proper procedure would require the tax authority to obtain statements from both the sender and recipient before determining if rental income was involved.
Governance controls
Tax expert Murat Bal suggested that people should file appeals with the tax authority. He also stated he expected the Gelir İdaresi Başkanlığı to take necessary measures within 1-2 months to address the issue.
Classification
Sources and evidence
Sources not yet published
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