The KURGAN system (Kuruluş Gözetimli Analiz Sistemi – Establishment-Supervised Analytics System), which has assumed a central role in the transformation of Türkiye’s tax audit framework in recent years, is an advanced administrative surveillance tool built upon multilayered data analytics, transaction-based risk scoring, and validation logic. Rather than relying on a traditional taxpayer-centric risk assessment model, the system analyses economic transactions themselves through the parameters of “authenticity–consistency – reasonableness.” Accordingly, KURGAN functions as an algorithmic early-detection and signalling mechanism capable of evaluating both structural risk factors associated with the establishment of an enterprise and periodic transaction patterns.

The legal function of this mechanism does not consist of imposing sanctions directly, but rather of generating “pre-signals” that shape the trajectory of administrative procedures. These signals indicate mismatches between economic reality and reported or documented transactions—discrepancies that may be difficult to detect instantaneously in a purely digital environment. Whether tax return data correspond to the taxpayer’s transaction volume, whether documentary flows align with commercial activity, and whether a transaction has been retrospectively removed from the records through corrective returns constitute critical “reconciliation-risk areas” identified by the system. The verification or elimination of such risks often requires clarifications from the taxpayer; accordingly, the administration prefers to engage in pre-audit communication rather than initiate a formal audit immediately.

The primary function of KURGAN notices is to establish an early-warning mechanism enabling taxpayers to conduct their own internal assessment of transaction sets identified as potentially risky. Although these notices do not legally constitute audit orders, they do represent a preliminary stage that influences whether an audit will subsequently be initiated. Therefore, such notices must not be regarded as mere informational documents that may safely be ignored; instead, they should be viewed as administrative instruments intended to facilitate the demonstration of transaction authenticity in line with the principles of evidentiary sufficiency, transparency, and “evidence economy” that underpin tax law.

Following receipt of a KURGAN notice, taxpayers are expected to conduct a comprehensive review of their commercial reality, documentary flow, and business relationships. If the taxpayer’s own assessment confirms the risk assumptions underlying the notice, corrective filings or revisions to internal control mechanisms may be required. Conversely, if the taxpayer is convinced that the notified transactions bear no risk, all documentation capable of substantiating the factual reality of the transaction should be compiled into a coherent evidentiary file for potential use in later audit stages. At the core of the signalling system lies the objective of reducing uncertainty and verifying the material accuracy of transactions.

Failure to respond, ignoring the notice altogether, or submitting a technically or legally inconsistent explanation may lead the administration to treat the risk signal as confirmed. Such an inference increases the likelihood that the taxpayer will be placed on an audit track and may ultimately expose the taxpayer to assessments of administrative sanctions, or even criminal scrutiny, depending on the nature of the underlying transaction. Thus, despite not being sanction-imposing administrative acts in themselves, KURGAN notices constitute critical junctures that significantly influence the course of administrative proceedings.

Another function of the signalling mechanism is the rationalisation of administrative audit capacity. The early communication of risk indicators reduces the number of unnecessary or ambiguous audits initiated in the field, thereby enhancing administrative efficiency and contributing to the protection of taxpayer rights. Accordingly, KURGAN should be understood not merely as a risk-analysis tool but also as a normative instrument that embodies the administration’s “audit economy” and “behavioural compliance” policies.

The increasing importance of this signalling mechanism is particularly evident in the context of the fight against fraudulent documentation. Under the administrative framework dated 18 April 2025, even users of fraudulent documents are expected to substantiate the factual reality of their transactions clearly and concretely on the basis of thirteen core criteria. This marks a departure from the long-standing administrative practice that tended to give greater weight to the assumption of “unknowing use.” Especially in circumstances where KURGAN notices flag risk indicators relating to suppliers, taxpayers face an additional behavioural pressure that may influence future assessments concerning “knowing use.”

In this respect, taxpayers receiving KURGAN notices should promptly initiate internal review processes, reassess procurement and supply-chain procedures, and strengthen their record-keeping and documentation practices in accordance with the principles of transparency and demonstrability. Verification of supplier identity, business activity, and operational capacity; proper documentation of delivery, transport, and payment flows; and the establishment of written internal control mechanisms significantly enhance the taxpayer’s defensive capacity in the event of a subsequent audit.

Ultimately, while KURGAN notices do not in themselves create administrative or criminal liability, they exert considerable influence over the future direction of audit procedures. For this reason, taxpayers should not underestimate such notices and should respond in a manner appropriate to the specifics of their situation. In particular, where risks relating to fraudulent or misleading documentation may be present, seeking advice from professionals specialised in tax law and tax-related criminal law is essential to ensure proper positioning and effective risk management.