Many countries have regulations to grant a denouncement prize and ensure that people who are aware of tax evasion report this situation. Turkish tax system also has available regulations for denouncement prize under the Law No. 1905. The Law has been in effect since 1931 and it appears not to be functioning properly. There are several reasons thereof. These may be summarized as follows: not updating the bonus tariff, people not desiring to be called as informer, insufficient introduction of denunciation mechanism by the administration. The present study focuses on legal and administrative arrangements for the effective functioning of denouncement prize.