This study meticulously examines the development of the tax system in the Republic of Turkey from its establishment until 1949. It analyzes the process of dismantling the old tax structure, inherited from the Ottoman Empire and no longer able to meet the economic conditions of the time, and establishing a modern system to fulfill the financial needs of the young Republic. The study addresses taxes on income, wealth, and expenditures under separate headings, revealing their legal basis, taxpayers, tax bases, rates, exemptions, and their shares within tax and budget revenues.

One of the most significant reforms of the period was the abolition of the Aşar Tax in 1925, which imposed a heavy burden on the agricultural sector and led to injustices due to the tax farming system. The search to fill the revenue gap created by this reform became one of the main motivations for tax policies. In the area of income taxes, the modern Kazanç Vergisi (Profit Tax) replaced the old Temettü Vergisi (Dividend Tax) starting from 1926. The Kazanç Vergisi evolved with the 1934 amendment, incorporating modern taxation techniques such as the declaration method, lump-sum method, and withholding tax into the system. Additionally, in response to crises like the 1929 Great Depression, supplementary income taxes such as the İktisadi Buhran Vergisi (Economic Depression Tax) and Muvazene Vergisi (Balance Tax) were introduced, which particularly increased the burden on salary and wage incomes.

In taxes on wealth, the 1931 Land and Building Taxes, based on the capital value of land, marked the beginning of modern wealth taxation. The Ağnam Vergisi (Livestock Tax), levied on animals, was first converted into the Sayım Vergisi (Census Tax) and then into the Hayvanlar Vergisi (Animals Tax), expanding its scope. During World War II, extraordinary wealth taxes such as the Varlık Vergisi (Wealth Tax) and Toprak Mahsulleri Vergisi (Agricultural Products Tax) were implemented.

Taxes on expenditures were among the state’s most important sources of revenue. The most significant development in this area was the implementation of the Umumi İstihlak Vergisi (General Consumption Tax) in 1926, which can be considered the first example of today’s Value Added Tax and functioned as a general sales tax. However, due to implementation difficulties, this short-lived tax was replaced by the Muamele Vergisi (Transaction Tax) in 1927. The Muamele Vergisi, with subsequent amendments, focused on industrial production, imports, and banking transactions, becoming one of the cornerstones of the tax system of the period. In foreign trade, with the end of the restrictions imposed by the Treaty of Lausanne in 1929, a protectionist Customs Duty tariff aimed at protecting national industry and increasing treasury revenues was put into effect.