ENTRANCE

The healthy functioning of the tax system depends on taxpayers fulfilling their tax obligations correctly and honestly. One of the most common methods in combating tax evasion is issuing invoices for goods or services that do not actually exist. This is referred to in practice as a "fake invoice" or "fictitious invoice".

Issuing fraudulent (fictitious) invoices not only leads to tax losses but also fuels the informal economy, creates unfair competition, and negatively impacts public revenues. Therefore, it is subject to severe penalties under Turkish tax law.

The Concept of Fake Invoices

It is defined in Article 359(b) of the Tax Procedure Law.

Article 359-(b) of the Tax Procedure Law: Those who destroy books, records, and documents kept or prepared in accordance with tax laws and which are subject to the obligation of preservation and presentation, or who destroy pages of books and replace them with other pages or do not replace them at all, or who prepare originals or copies of documents completely or partially forged, or who use these documents, shall be punished with imprisonment from three to eight years. A document prepared as if a real transaction or situation exists when it does not is a forged document.

According to this article, a forged document is a document prepared as if a real transaction or situation exists, even though it does not. Accordingly, invoices issued by showing a completely fictitious sale of goods or provision of services are considered forged invoices.

The crime of issuing fake invoices is a type of "tax evasion" crime regulated in this article.

What crime does issuing fictitious invoices constitute?

Issuing fictitious invoices constitutes a crime under the Tax Procedure Law, which regulates the preparation of forged documents. According to this law, individuals who issue or use fictitious invoices are punishable by imprisonment ranging from 3 to 8 years.

Is using fictitious invoices a crime?

Issuing fictitious invoices, as well as using them, is a crime according to the Tax Procedure Law. Therefore, this is a crime with alternative actions. The perpetrator often resorts to using fake invoices to launder the proceeds of the crime, reduce the tax base by inflating costs, or obtain VAT deductions.

Elements of the Crime of Issuing Fake (Nylon) Invoices

The crime of issuing forged (fictitious) invoices occurs not only through the preparation of a forged document, but also when that document is issued and used as a legally valid invoice. For the crime to be constituted, both the material and moral elements must be present.

1. Material Element:
The subject of a forged invoice must be based on a good or service that does not actually exist. If the transaction described in the document has not actually taken place, the invoice is considered "fake". The invoice must include mandatory elements such as the date of issue, serial number, seller and buyer information, type, quantity, and price of the goods or services. If any of this information is missing, the document cannot be considered an invoice, and no criminal offense is committed.

2. Perpetrator and Victim:
The real person who issues or uses the fake invoice is the perpetrator. The victim of the crime is the state, because tax revenues are harmed by this action. However, not only the company manager but also the person who actually issues or records the invoices in the accounting system may be held responsible.

3. Mental Element:
This crime can be committed intentionally. The perpetrator's aim is usually to gain unfair advantage or reduce their tax burden. Incorrect invoices issued due to negligence or carelessness are not considered fake invoices.

4. Types of Fake Invoices:

Completely False Invoice: Invoices issued even though no goods or services were actually purchased.
Partially False Invoice: An invoice containing a factual transaction along with a factual discrepancy.

5. The Act of Using:
The crime is constituted not only by issuing a forged invoice, but also by attaching it to a tax return and submitting it to the tax office. The act of using is completed when the expected tax advantage from the forged invoice is obtained.

When all these elements are considered together, the crime of issuing fictitious invoices is a penal norm aimed at protecting both the economic order and the tax security of the state.

The Difference Between a Forged Document and a Document That Is Misleading in Terms of Its Content

A forged document and a document that is misleading in content are different concepts. A forged document does not depict a real transaction or event; yet, the document has been created. A document that is misleading in content, on the other hand, depicts a real transaction, but the content of the document is inconsistent with that transaction.

For example, an invoice issued when no goods have been delivered may be considered a forged document. Conversely, if a real delivery of goods has taken place but the quantity, price, or quality is misrepresented, a dispute over the content of the document may arise.

This distinction can directly affect the nature of the crime, the amount of punishment, and the defense strategy. Therefore, the concepts used in the tax audit report, the supporting findings, and which clause the alleged act falls under should be carefully examined.

Punishment for the crime

According to current regulations, those who issue fake invoices imprisonment for 3 to 8 years . With the amendment to Law No. 7394 dated April 8, 2022, the upper limit for offenses under Article 359/b of the Tax Procedure Law was increased from 5 to 8 years.

This crime may also result in financial consequences for the tax authorities, tax evasion penalties, late payment interest, and late payment surcharges . A prison sentence in criminal proceedings does not prevent the separate application of tax evasion or irregularity penalties.

The following factors are important in determining the punishment:

• Whether the act constitutes a forged document or a misleading document
• Whether the invoice has been issued or used
• Crime dates and tax periods
• Number of invoices, amount, and seasonal intensity
• Whether or not a tax loss occurred
• The perpetrator's intent and documents relating to the commercial relationship
• Whether the provisions on continuous offenses will be applied
• Whether the conditions for effective repentance exist

Opinion Requirement

In cases involving the issuance of fraudulent invoices , the tax crime report and the opinion of the report evaluation committee are crucial under Article 367 of the Tax Procedure Law . In practice, this opinion is considered a prerequisite for prosecution. Without an opinion, a dismissal due to the lack of a prerequisite for prosecution may be considered instead of a conviction or acquittal.

Effective Repentance / Sentence Reduction

In cases involving offenses under Article 359 of the Tax Procedure Law, if tax evasion is detected, a reduction in penalties may be possible upon payment of a portion of the assessed tax, late payment interest, late payment penalty, and imposed fines. If payment is made during the investigation phase, the penalty by half; if payment is made before a verdict is reached during the prosecution phase, by one-third .

Important current point: The regulation requiring that no lawsuit be filed in tax court or that any existing lawsuit be withdrawn in order to benefit from this discount has been annulled by the Constitutional Court's decision numbered 2022/81 E., 2023/153 K.

Statute of limitations

Since the crime of issuing fake invoices carries a prison sentence of 3 to 8 years, the statute of limitations for prosecution 15 years .

FREQUENTLY ASKED QUESTIONS

What is the penalty for issuing fake invoices?

According to the Tax Procedure Law, a person who issues a fake invoice is punishable by imprisonment for 3 to 5 years. The penalty may be increased if the crime is committed in an organized manner or if the public damage is significant. Heavy tax evasion penalties and late payment interest are also applied. Therefore, the consequences are quite severe, both legally and financially.

Is it a crime to unknowingly use a forged invoice?

Liability may arise even if a forged invoice is used unknowingly, but the element of intent is evaluated in detail. Whether the taxpayer exercised due diligence is crucial. Failure to conduct thorough company research or engaging in suspicious business dealings can be considered evidence of intent. However, if due diligence was genuinely exercised, criminal liability may be mitigated.

Who is considered to have issued a fraudulent invoice?

Even if no genuine transaction has taken place, the person issuing the invoice is considered to have issued a fraudulent invoice. This person could be a company director, authorized representative, or the person actually managing the company. It is sufficient for the document to give the impression of a commercial transaction. Whether the invoice is electronic or paper does not change this.

What kind of damage can a fake invoice cause to a taxpayer?

The use of forged invoices can lead to heavy tax penalties, imprisonment, tax evasion, and reassessment of previous years' taxes. It damages the taxpayer's business reputation and makes the company vulnerable to audits. Furthermore, the taxpayer may be held jointly liable with the person who issued the document. Therefore, the consequences can lead to long-term economic losses.

How to defend yourself in a fake invoice crime?

In the defense, all evidence demonstrating a genuine commercial relationship must be presented to the court. Bank records, delivery notes, contracts, warehouse transactions, and correspondence are important pieces of evidence. Documents proving that the perpetrator acted without intent and did not violate their duty of care are also crucial. This evidence can affect the nature of the crime.

Can the sentence for the crime of issuing fake invoices be suspended?

The court evaluates the possibility of suspending a prison sentence based on the perpetrator's criminal record, the compensation for damages, and the manner in which the crime was committed. Compensation for public damages may increase the likelihood of a suspension. However, in cases involving organized crime or high-value forged documents, a suspension may not be possible. The judge makes the decision on suspension based on the specific circumstances of the case.

Will an accountant who issues fake invoices be held liable?

Even if an accountant or financial advisor does not knowingly commit a crime, they may still face liability in some cases. Professionals who knowingly and willingly facilitate the creation of forged documents are directly subject to criminal liability. Disciplinary action may also be taken. Therefore, accounting processes must be carried out carefully.

Is there a difference between a fictitious invoice and a fake invoice?

A fictitious invoice is a term used to describe a fake invoice, but in practice, they refer to the same concept. Both terms are used for documents that are false and contain untrue content. There is only a terminological difference. The legal and criminal consequences are the same.

What happens if a fake invoice is detected?

When the tax authorities detect a forged document, they first impose penalties for tax evasion and irregularities. Then, they file a criminal complaint with the prosecutor's office, initiating the legal process. The taxpayer's books and transactions are subjected to a detailed examination. The process unfolds in both administrative and criminal law aspects.

SAMPLE SUPREME COURT DECISIONS REGARDING THE CRIME OF ISSUING FAKE INVOICES

1. Court of Cassation, 11th Criminal Chamber — Case No: 2019/469, Decision No: 2019/2876

Summary of the Event

A report prepared by tax inspectors on a company stated that the company was not located at its official address, had no warehouses, assets, or employees, and therefore all invoices issued by the company were found to be fake (fictitious). The local court accepted this "Tax Inspection Report" prepared by the tax inspectors as the sole and conclusive evidence and, without conducting any further investigation, directly convicted the defendant.

Supreme Court's Assessment

The fundamental aim of criminal proceedings is to uncover the material truth beyond any doubt. Tax audit reports prepared solely by an administrative body cannot, by themselves, be considered sufficient evidence for a conviction in a criminal court.

The court should have heard the company officials who used the invoices as witnesses , investigated the delivery notes, weighbridge slips, and payment documents (bank statements, checks, etc.) related to the goods in question, and a forensic expert to examine . A decision rendered without gathering this material evidence and with an incomplete prosecution is unlawful.

2. Court of Cassation, 11th Criminal Chamber — Case No: 2016/6256, Decision No: 2019/1206

Summary of the Event

The defendant, who was in a very poor economic situation and struggling to make ends meet, allowed a company to be established in his name at the request of unknown individuals who offered him a small sum of money. Without the defendant's knowledge, millions of liras worth of fake invoices were issued through this company, which was nominally the company's director. The defendant argued in court that he had no involvement with the invoices and had only signed them in exchange for money. However, the local court sentenced the defendant on the grounds that he was officially the legal representative of the company.

Supreme Court's Assessment

For the crime of issuing fake invoices to occur, the perpetrator must have the intent to commit the crime (knowledge and will). Merely appearing as a company partner or manager in official records is not sufficient evidence to establish criminal liability.

Considering the defendant's social, economic, and educational background, it is contrary to the ordinary course of life for him to single-handedly conduct a commercial activity of this scale. The court the real perpetrators (the managers behind the scenes) . It is erroneous to impose a sentence based solely on official records without definitively proving the defendant's criminal intent.

3. Court of Cassation, 11th Criminal Chamber — Case No: 2020/2867, Decision No: 2020/5751

Summary of the Event

A company official issued and released numerous fraudulent invoices in different months (March, June, and September) and under different company names within the same calendar year (e.g., 2018). The local court considered each instance of the defendant's actions as separate offenses and sentenced the defendant to separate prison terms for each period.

Supreme Court's Assessment

According to the application of the Tax Procedure Law and established case law, within the same calendar year constitutes a single legal offense. It is procedurally incorrect for the court to impose separate penalties for each invoice period.

However, the fact that the crime has been committed more than once in the same year should not go unpunished. The court should sentence the defendant for a single crime, but increase this sentence (by one-quarter to three-quarters) in accordance with the provisions of Article 43/1 of the Turkish Penal Code concerning "consecutive crimes"