The long-awaited Law on the Amendments to Certain Legislations for the Enhancement of the Investment Environment numbered 6728 (the "LEIE") was enacted on 15 July 2016, and has entered into force on 9 August 2016 pursuant to its announcement in the official gazette.
The LEIE has introduced significant changes to the provisions of several laws, including the Turkish Commercial Code, the Execution and Bankruptcy Law, the Law on Cheques and several tax laws. This article will focus on the major amendments brought to the Law on Stamp Duty numbered 488 (the "LSD") by the LEIE.
Prior to the enactment of the LEIE, each executed original copy of a document was individually held subject to stamp duty either for a fixed fee or at a rate of %0,948 calculated over the highest monetary value stipulated in the document. This was heavily criticised by companies, especially where execution of agreements with high monetary values were involved. As per the LEIE, each executed original copy shall no longer be subject to stamp duty; instead it shall be payable in respect of only one copy no matter in how many originals the document is executed.
The LEIE has also ceased the accrual of separate stamp duty for each guarantee and/or surety in one document. Therefore, as of 9 August 2016, stamp duty shall be deemed to have accrued for only one guarantee/surety even if the document contain several guarantees/sureties. It should be noted that stamp duty for each type of undertaking shall be levied separately. In this regard, if a document contains three sureties and three guarantees, parties to the said document will be liable for the payment of stamp duty for the principal contract, one of the sureties and one of the guarantees.
Furthermore, contractual penalty clauses (e.g. deposits, forfeitures, pay deductions etc.) shall no longer levy stamp duty, provided that such penalty clause does not constitute an independent agreement itself. In other words, unless a penalty clause is executed as a separate agreement or is considered to be a separate agreement despite being incorporated into the principal agreement, it will not give rise to a further stamp duty liability.
Another important amendment brought by the LEIE is with respect to the application of stamp duty on contracts modifying the transaction amount of the principal contract. If an agreement has been subjected to stamp duty for the maximum amount stipulated under the LSD, which is currently TRY 1.797.117.30, merely increasing the monetary value will no longer give rise to additional stamp duty. It should be noted that any other amendment to the provisions of the agreement other than its monetary value is not included in the scope of this clause and may be subject to additional stamp duty.
The LEIE has also brought several significant stamp duty exemptions as well. Some noteworthy exemptions are as follows;
- share transfer documents of joint stock companies, funds, limited partnerships divided into shares and limited liability companies are no longer subject to stamp duty,
- documents regarding the transfer of loans provided by banks, foreign credit institutions and international authorities and the transfer of receivables arising from the same shall be exempted from stamp duty,
- documents concerning the transfer of loans provided by finance companies are no longer subject to stamp duty,
- documents issued with regard to the building, refurbishment and conversion of, and maintenance and repair services provided to vessels, yachts and other marine vehicles of any nature within a Turkish shipyard is also exempted from stamp duty.
It should be noted that the aforesaid exemptions will only be applicable to documents that are executed after 9th August 2016 or where stamp duty is deemed to have accrued after this date.
The Turkish government has amended several rigid provisions of the Turkish LSD, hoping to foster the Turkish economy that has been gradually slowing down for the last several years due to the global economic crisis. The aforementioned amendments to the stamp duty provisions are likely to encourage both domestic and foreign investors and boost the Turkish economy.
Originally published 03 October 2016
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