MINISTRY OF FINANCE, KURGAN, AND VEDAS: 24/7 INSIDE THE BUSINESS

• MINISTRY OF FINANCE, KURGAN, AND VEDAS: 24/7 INSIDE THE BUSINESS
• İZBAŞ FINANCIAL AND LEGISLATIVE CONSULTANT PROF. DR. KERAMETTİN TEZCAN:
• “THE AI-BASED KURGAN AND VEDAS SYSTEMS IMPLEMENTED ON OCTOBER 1 ARE STILL NOT FULLY UNDERSTOOD BY THE BUSINESS COMMUNITY AND ACCOUNTANTS.”
• “THE USE OF ‘KURGAN,’ ‘VİZ,’ AND ‘DIGITAL TRACES & DATA MINING’ IN AI-BASED ELECTRONIC TAX AUDITING RAISES CONCERNS REGARDING TAX CONFIDENTIALITY, THE USE OF PERSONAL DATA, AND CONSTITUTIONAL PROVISIONS PROTECTING THE FREEDOM OF TRADE.”

With the introduction of the Institution Supervision and Analysis System (KURGAN) and the Tax Audit and Analysis System (VEDAS) by the Ministry of Treasury and Finance on October 1, 2025, a new era in tax auditing has begun for businesses of all scales operating in Turkey, as well as for their partners and executives.
The AI-based systems, which establish new regulations for detecting and penalizing those who issue or use fraudulent documents, were examined in detail at a conference jointly organized by İzmir Free Zone (İZBAŞ) and the Menemen Chamber of Commerce.

The conference, featuring Prof. Dr. Keramettin Tezcan, Financial and Legislative Consultant of İZBAŞ, drew great interest from business owners and certified public accountants.
One of Turkey’s leading experts in financial law, Prof. Tezcan explained that the core philosophy of KURGAN is not to label taxpayers as “risky”, but rather to assign a risk score to transactions such as the exchange of goods and services, functioning as an early warning system.

He emphasized that the system does not assign risk scores to buyers or sellers, but instead analyzes multiple data sources to calculate the risk level of the transaction itself.
Prof. Tezcan noted:

“Over the past month, we’ve observed that many business owners and accountants still lack sufficient knowledge about KURGAN and VEDAS, the Tax Audit and Analysis System. This new era represents the Turkish implementation of a system already adopted by OECD countries worldwide. Moreover, it is among the necessary measures to prevent Turkey’s return to the grey list. The system’s fundamental goal is to increase voluntary compliance with tax obligations.”

Highlighting that KURGAN is designed to operate by accessing real-time data such as e-documents, Prof. Tezcan stated that taxpayers’ responses to information requests are also directly used as inputs in the risk analysis system, dynamically shaping audit plans.

He added that a clear understanding of the system is of utmost importance and continued:

“KURGAN is not merely a software project. It is part of an integrated strategy that includes legislative changes such as recognizing the issuance of fake documents as a ‘predicate offense,’ distinguishing tax audits from criminal tax investigations, and implementing technological innovations like the Report Automation System that accelerates audit processes.

The analytical component of KURGAN, which relies on numerous criteria, measures transaction risks. Transactions that deviate from reality or fail to accurately reflect their true nature or value pose the most significant risks. Similarly, transactions involving related parties at non-arm’s length prices are considered risky.

The system currently focuses on the authenticity of transactions and aims to detect fraudulent documents as early as possible. It enables concurrent audits and issues early warnings to taxpayers through information requests regarding their risk status. Thus, it focuses only on a limited number of high-risk transactions while also allowing taxpayers to assess their own risk positions.

However, the use of AI-based tools such as ‘KURGAN,’ ‘VİZ,’ and ‘Digital Traces & Data Mining’ in electronic tax auditing raises concerns in terms of tax confidentiality, personal data usage, and constitutional provisions protecting the freedom of trade.”

At the end of the conference, Menemen Chamber of Commerce Chairman İzzet Süsoy and İZBAŞ Chairman of the Board Eyüp Sevimli presented Prof. Dr. Keramettin Tezcan with a portrait of Atatürk in appreciation of his valuable contributions.

KEY RISK FACTORS HIGHLIGHTED IN

KURGAN AND VEDAS RISK ANALYSES

• Issuing or using fraudulent documents
• Constantly holding excessive cash in the company’s cash account
• Lending large amounts of money to shareholders or related parties without corresponding interest income or with unusually low interest rates
• Owing amounts to shareholders or related parties exceeding three times the company’s capital
• Having significant financial expenses due to high loan usage despite sufficient cash or bank balances
• Check collections made directly or indirectly through related parties
• Trade receivables in the balance sheet not matching the total sales in the income statement
• Existence of bad debts
• Recognizing provisions for doubtful receivables in a period different from when the debt became doubtful
• Trade payables inconsistent with trade receivables and inventory accounts
• Excessive inventory levels
• High provisions for inventory devaluation
• Long-outstanding advance accounts
• Fixed asset amounts inconsistent with the scale of operations
• Changes in depreciation methods within the same fiscal period
• Using bank loans despite having significant cash equivalents
• Lending money to shareholders while bank loans are in use
• Profitability ratios deviating from industry averages
• Low profitability compared to total sales
• Profit margins fluctuating significantly compared to previous years
• Cash sales rates significantly below or above industry averages