Turkey, Dogan fail to settle on record tax fine

* Dogan said earlier court battle would continue if no deal

* Fine threatens company future, has attracted EU attention

By Birsen Altayli

ISTANBUL, Nov 25 - Talks between Turkey's largest media company, Dogan Yayin <DYHOL.IS>, and tax officials over a 4.8 billion lira fine failed to produce a settlement, the company said on Wednesday.

The lack of a deal plunges the dispute over the fine, the largest in Turkey's history, back into uncertainty, threatening the future of Dogan Yayin which said it would continue its legal battle against the fines.

European Union governments are following the case.

Diplomats have said the prospect of a media critic being fined into extinction would reflect poorly on Turkey's Islamist-rooted government when it is bidding to become a member of the EU. [ID:nLD723469]

"There has been no settlement reached by Dogan Yayin or its units with the Finance Ministry's tax authority. As we have previously said ... we will continue with the legal process against the tax fine in the case that no settlement is reached," Dogan Yayin said in a statement.

The meeting between the two sides began on Tuesday and lasted until the early hours of Wednesday.

The fine, related to accounts of Dogan Yayin units from 2005-2007, was imposed on the grounds the share exchange transactions among Dogan TV units did not comply with corporate income tax law.

Dogan has rejected the charge.

Critics of Prime Minister Tayyip Erdogan's government say the case against Dogan, which controls half of Turkey's private media, is politically motivated.

The government has denied that, saying Dogan was acting like an opposition party through its critical coverage.

German publisher Axel Springer AG <SPRGn.DE> said last week it planned to buy a 29 percent stake in Dogan Yayin if the tax issue was settled successfully. [ID:nLJ435367] ((thomas.grove@reuters.com; Telephone: +90 212 350 7051; Reuters Messaging: thomas.grove.reuters.com@reuters.net))