By Yeliz Candemir and Emre Peker 

ISTANBUL--Turkey's Finance Minister Mehmet Simsek said Tuesday that social-media companies such as Twitter Inc. must pay taxes to Ankara, signaling the next round in the government's scuffle with global Internet firms that dominated an otherwise uneventful budget presentation.

Social-media firms must establish offices in Turkey because they engage in ongoing trade but avoid paying income and corporate taxes without a local branch, Mr. Simsek said, articulating the government's demands from companies such as Twitter and Facebook Inc.

"Many social-media firms, including Twitter, are reaping unfair profits from Turkey and they aren't paying taxes due on those gains. We see this as a serious problem," Mr. Simsek said.

The finance minister's declarations follow a tug of war between Turkey and mostly U.S.-based Internet companies, whose services have emerged as key forums for the opposition to organize and voice dissent. Turkey banned Twitter March 20 and only lifted its blockade April 3, after the constitutional court overruled the blackout.

Twitter representatives, led by Vice President Colin Crowell, have been meeting since Monday with Turkey's telecommunications regulator and officials at Prime Minister Recep Tayyip Erdogan's office in Ankara. The government is seeking four concessions from Twitter: establishing a local office, implementing Turkish court orders, enabling account blocking, and tax payments.

The company asked for an audience with the Finance Ministry as well, Mr. Simsek said Tuesday, adding that he wasn't aware if the gathering had taken place. Twitter hasn't yet publicly commented on its meetings. The firm's representatives met President Abdullah Gul Tuesday afternoon. The president had previously breached the ban to tweet his disapproval.

Ankara bought technology from the Netherlands to identify tax losses stemming from Internet companies doing business in Turkey without local offices, Mr. Simsek said. The government could even consider sidestepping rules it adopted as a member of the Organisation for Economic Cooperation and Development, or OECD, to collect taxes, the minister said.

"There are some rules there that are limiting us, such as the clause that a company pays taxes where it is headquartered. But if a firm is transacting in a country through the cyber world, and especially not setting up an office, this is unacceptable. We must definitely tax them. " Mr. Simsek said.

The finance minister cited a Web giant that had been slapped with a tax fine, and established an Istanbul office amid ongoing court hearings, without naming the company.

Google Inc., which opened a Turkey office in 2006, has been fined for not disclosing ad revenues and appealed the cases. The Mountain View, California-based company's video-sharing website, YouTube, was sporadically banned from 2007 to 2010, and has been shuttered since Match 27 on national security grounds.

Twitter and YouTube had emerged as key platforms in leaks damaging Mr. Erdogan's governing party in the lead-up to the March 30 local elections, which the premier swept with 46% national support.

Meanwhile, the budget is on track to meet year-end targets, Mr. Simsek said. The budget deficit for the first quarter was 1.5 billion Turkish liras ($707 million), supported by surpluses in January and February even as the government posted a 5.1 billion lira shortfall in March, Mr. Simsek said in Ankara. The government's tax income increased 10% on the year in the first quarter.

"We are at a very good point at the budget. We keep budget tight to strengthen the central bank's hand to lower inflation," Mr. Simsek said, reiterating the government's desire for a slowdown in price increases that will also provide an incentive for interest-rate cuts to support economic growth.

Turkey's $820 billion gross domestic product expanded at a moderate pace in the first three months, but abating political risks will provide a boost going forward, Mr. Simsek said.

Write to Yeliz Candemir at yeliz.candemir@wsj.com and Emre Peker at emre.peker@wsj.com

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