According to Decree Amending to the Decree numbered 32 on the Protection of the Value of Turkish Currency (the "Amending Decree") published in the Official Gazette dated 13 September 2018 and numbered 30534, the Turkish residents may not determine contract value and other additional contractual payments in foreign currency or indexed foreign currency stipulated in agreements such as purchase and sale of any kind of movable and immovable properties, leasing of any kind of movable and immovable properties, including transport leasing and financial leasing, and labour, service and construction. As per the Amending Decree, Treasury and Finance Ministry is entitled to stipulate the exemptions and scope of the Amending Decree.
Therefore, Communiqué Amending to the Communiqué Regarding the Decree numbered 32 on the Protection of the Value of Turkish Currency (the "Amending Communiqué") issued by Treasury and Finance Ministry has been published in the Official Gazette dated 6 October 2018 and numbered 30557 and entered into force on its publication date. The Amending Communiqué determines the scope of the restrictions applicable to the contracts executed in or indexed to foreign currency.
- The Turkish Residents may not determine the following contracts' value and other additional contractual payments in foreign currency or indexed foreign currency.
- Real estate sales contracts,
- Real estate lease contracts,
- Labour contracts apart from below mentioned,
- Service contracts including consultancy, brokerage and transportation contracts apart from below mentioned,
- Construction contracts apart from below mentioned.
- The values in the negotiable instruments may not determine in foreign currency or indexed foreign currency within the scope of the contracts that may not be concluded in or indexed to foreign currency.
- The Turkish Residents may determine the following contracts' value and other additional contractual payments in foreign currency or indexed foreign currency.
- Service contracts mentioned below:
- Service contracts to be executed by and between non-citizens of Turkey,
- Service contracts to be executed within the scope of sales and deliveries considered as export, transit trade, import and foreign exchange earning activities and services,
- Service contracts to be executed within the scope the activities to be carried out abroad by the Turkish residents,
- Service contracts to be executed by and between Turkish residents in relation to the electronic communication which are commenced in Turkey and concluded abroad or vice versa.
- Construction contracts in relation to building, repairment and maintenance of the vessel described in Turkish International Vessel Registry Law numbered 4490 and Law Amending to the Decree-Law numbered 491.
- Movable properties sales contracts excluding the vehicles including working machines,
- Sales contracts in relation to the software produced abroad and license and service contracts regarding hardware and software within the scope of information technologies,
- Financial leasing contracts in relation to the vessel described in Turkish International Vessel Registry Law numbered 4490 and Law Amending to the Decree-Law numbered 491,
- Financial leasing contracts to be executed within the scope of the Articles 17 and 17/A of the Decree numbered 32 on the Protection of the Value of Turkish Currency,
- Labour contracts to be signed between Turkish residents who do not have Turkish citizenship,
- The contracts to be signed by state institutions and organizations and Turkish Armed Forces Foundation apart from the sales and lease contracts of immovables,
- The contracts to be executed by and between the contractors and the third parties if these are within the scope of execution of the public tenders, contracts and international agreements executed in foreign currency or as indexed to foreign currency signed by the state institutions and organizations,
- Contracts executed by the banks in relation to transactions carried out by Treasury and Finance Ministry under the Law on Public Finance and Debt Management numbered 4749,
- Provided that the provisions of the Decree numbered 32 on the Protection of the Value of Turkish Currency are reserved; issuance, exportation, purchase and sale and the other transactions of the capital market instruments under the Capital Market Law, numbered 6362,
- Labour and service contracts executed by the branches, representation and/or liaison offices of the persons residing abroad, or companies participated directly or indirectly by the persons residing abroad, with a minimum shareholding of 50% and companies located in the free zone, concerning their activities within the context of free zone;
- Contracts -other than those relating to sale and lease of immovable property and employment contracts- signed by (i) the commercial airline businesses conducting passenger, cargo and mail transport activities, (ii) the companies providing technical care services for the airline transport vehicles and their motors, parts and components, (iii) public or private entities who are authorized or licensed to render ground services at the airports as well as the entities established or participated with a minimum shareholding of 50% by the foregoing.
- The Scope of Being a Turkish Resident:
As per Article 20 of the Amending Communiqué, the branches, representation and/or liaison offices of the persons residing abroad, their funds managed and operated by them or companies participated directly or indirectly by the persons residing abroad, with a minimum shareholding of 50% shall be accepted as the Turkish residents.
- The Determination of the Exchange Rate of Turkish Lira
In the case that the parties fail to agree on the exchange rate to be applied to the agreement, the contract value and other additional contractual payments in foreign currency or indexed foreign currency shall be determined by applying the monthly consumer price index rate on the date of redetermination which set by the Turkish Statistical Institute for each month to be exchanges amount in Turkish currency that calculated based on the indicative effective selling rate on 02.01.2018 announced by the Central Bank of the Turkish Republic.
The rental agreements of residential premises and roofed workplaces executed before 13.09.2018 shall be determined in Turkish currency for two years according to above mentioned principles. However, in the case of dispute in relation to the contract price for one-year period following the rent year the determination has been made, the contract price shall be increased based on the monthly changing rates of consumer price index determined by Turkish Statistical Institute for each month from the determination date until the end of such rental year.
In the event that the parties cannot mutually agree on the contract price determined in Turkish currency for the next rental year, the contract price shall be determined by increasing the previous amount on the basis of the monthly changing rates of consumer price and this amount shall be valid until the end of these two years period.
This provision shall not be applied to collected or deferred debts.
- The Sanction in the event of Non-Compliance
According to Article 3 of the Law on Protection of The Value of Turkish Currency numbered 1567, the person who violates the obligations stipulated in communiqué and decree issued in accordance with the provisions of this Law numbered 1567 shall be fined with administrative fine in the amount of from three thousand Turkish Liras to twenty-five thousand Turkish Liras. Please be aware that these amounts shall be updated according to annual index. For 2018, these amounts are calculated as from six thousand three hundred Turkish Liras to fifty thousand Turkish Liras.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.