Decree No. 32 regarding the Protection of the Value of the Turkish Lira has been amended by the new presidential decree dated 12/08/2018 in respect of Amending to Decree No. 32 on the Protection of the Value of the Turkish Lira ("Presidential Decree") pursuant to Article 1 of the Law on the Protection of the Value of the Turkish Lira dated 20/02/1930 and numbered 1567.
The Presidential Decree introduces significant limits and restrictions regarding contract price and payment liabilities determined and/or to be determined under lease agreements, employment agreements, services agreements and contracts of work.
The Amended Articles Introduced With The Presidential Decree Are Stated As Below:
Article 1 - The following sub-clause has been added to Article 4 of Decree No.32 on the Protection of the Value of the Turkish Lira dated 07/08/1989 ("Decree").
g) Residents in Turkey, except under certain circumstances to be determined by the Ministry, shall not agree contract price in lease of all kinds of movable and immovable properties including purchase and sale of movable and immovable, vehicle and financial leasing, leasing, and employment agreements, service agreements and contracts of work and, any other payment liabilities arisen from the foregoing agreements executed between Turkish residents, in foreign currency or indexed to foreign currency.
Article 2 - The following provisional clause has also been added to the Decree.
Provisional Article 8 - Except under certain circumstances to be determined by the Ministry, contract prices denominated in foreign currency under the existing agreements, which have already been executed and indicated in the above-mentioned sub-clause, will be re-determined in Turkish Lira within 30 days as of the effective date of Article 4(g) of Decree.
We hereby would like to emphasize that the definition of "Residents in Turkey" includes real persons and legal entities who have a legal residence in Turkey, including those who are employed, self-employed or owners of independent business abroad as per Article 2 of Decree No. 32 on the Protection of the Value of the Turkish Lira published in the Official Gazette dated 11/08/1989 and numbered 20249.
Within this scope, the afore-mentioned types of agreements especially employment agreements, service agreements, contracts of work and leasing agreements executed between Turkish residents after the effective date of this Presidential Decree shall be determined in Turkish Lira. On the other hand, with respect to the current agreements determined in foreign currencies or indexed to foreign currency, parties are obliged to renegotiate and convert the previously agreed foreign currency denominated prices to Turkish Lira within 30 days from 13 September 2018. Please note that the detailed rules on (if there will be any) how to convert and calculate the Turkish Lira equivalent of the contract prices have not yet been announced.
Furthermore, it should be noted that according to Stamp Tax Law No. 488, stamp tax liability may arise from the amendment or re-execution of existing agreements. Please be advised that newly drafted agreements shall also raise stamp tax obligations.
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. For further information please contact info@aktay.av.tr.
