Tax erosion is referred to tax revenue losses which are caused by tax expenditure, insufficiency of tax laws, etc. Tax expenditures are defined as revenue foregone because of tax exemptions, deductions, exclusions, credits, preferential tax rates or defferals.Tax erosion contains tax avoidance and tax evasion. It causes sacrifice from aims of taxation and tax principles which are determined to provide tax equity and qualification of taxation. Because of tax erosion, tax base is decreased, so tax revenue is reduced. If tax deduction, exemption, and exclusion are carried out excessively, the tax system may be worn out and imbalancement between potential tax base and actual tax revenues may be constituted. Revenue loses which are created by tax erosion, have to compared to social and economic benefits which are provided from preferential regulations at tax laws. Limits of preferential regulations which cause tax erosion and tax revenue loses, must be determined at the sufficient level which can accomplish only aims of taxation.To prevent tax erosion, the tax penalty which it provides to abandon tax crimes, must be applied effectively and tax inspections must be increased.