Journal of Tax Research

Abstract

Based on freedom of contract principle, entities are free when signing contracts with each other. But this freedom of contract is limited with law, morals and general order. Whenever private contracts face with these limitations, the freedom principle takes no effect and therefore such a contract is not supported by government. When such a contract is concluded, it has some effects imposed on two contract’s parties and from which government, as a third beneficiary party also benefits i.e. through collected taxes and levies. Sometimes in the contracts which are signed between two parties, it is observed that they intend to alter the latter effect by their agreement. The best example is the contract that includes the provision to tax one of the parties who is not the taxpayer (transferee). There is no doubt for legal penetration, its implied stipulation and public order opposition in this type of contract. Tax Administration as a beneficiary of such a contract calculates and collects the amount of set tax and it doesn’t insist on the original taxpayer stewardship. The difference between the two contract parties in the provision to be taken effect is verifiable in the judicial authorities. But the dispute between the parties and government with regard to the enforcement of this provision has different implications.