Turkey: Presidential Order On The Amendment Of The Decision Numbered 32 On The Protection Of The Value Of Turkish Currency

Last Updated: 17 September 2018
Article by Zeynep Ünlü and Duhan Kurt

Introduction

On 12 September 2018, President Erdoğan has issued the Presidential Order numbered 85 on the Amendment (the "Amendment") of the Decision Numbered 32 on the Protection of the Value of Turkish Currency (the "Decision No. 32") -that had been issued pursuant to the Law Numbered 1567 on the Protection of the Value of Turkish Currency (the "Law No. 1567")- which envisaged a new restriction relating to the determination of the payment obligations in foreign currency by and among the persons residing in Turkey.

The Amendment has been published in the Official Gazette dated 13 September 2018 and numbered 30534 and entered into force on its publication date.

As per the Amendment, the Ministry of Treasury and Finance (the "Ministry") shall execute the Amendment.  The Ministry, under the Article 20 of the Decision No. 32 and for the purposes of ensuring the application of and compliance with the Amendment, shall further be authorized to take any measures and request any document and information from the legal entities and natural persons in the form and timeframes it deems convenient.

The Scope of the Restriction

As per the Article 1 of the Amendment which is adding the new clause (g) to the Article 4 of the Decision No. 32, except for the cases that will be determined by the Ministry, neither the contract price nor the other payment obligations arising from the following transactions, executed between the persons residing in Turkey, may be determined in or indexed to foreign currency:

  • Purchase and sale of movable and immovable properties;
  • Lease of all kinds of movable and immovable properties, including leasing of vehicles and financial leasing;
  • Employment, service, construction and work agreements

As it is stated, the Ministry is authorized to determine the transactions and/or the cases that will be exempted from this restriction.

Under these circumstances -given that the restriction is brought for and applicable solely to the persons residing in Turkey-, although the contract price and/or payment obligations relating to the above-defined goods and/or services that are imported to Turkey and is owned by the persons residing in Turkey may be determined in foreign currency, the transactions that will be made to commercialize those in the Turkish market will need to be agreed and priced in Turkish currency. Thus, it will not be possible to reflect the contractual price and/or the payment obligations that are agreed by the importer in the original contract with the foreign person to the contracts to be entered into in the Turkish market.

The Adaptation Period

As per the Provisional Article 8 of the Decision No. 32 as amended by the Amendment, except for cases which will be determined by the Ministry, the values and/or payment obligations that are determined in the foreign currency by the agreements which are executed before the entry into force of the Amendment, shall be re-determined in Turkish currency within a period of 30 days (until 13 October 2018).

The Supervision of the Compliance

The Ministry shall be responsible from supervising the compliance of the Amendment and may apply measures in that respect. For instance, in case of non-fulfillment of the obligations and necessities stipulated in the Amendment, search and seizure measures may be enforced by the authorities assigned to conduct audits, in accordance with the Code of Criminal Procedure. Furthermore, as part of the audit to be conducted, the Ministry shall be authorized to wholly or partially, continuously or temporarily cease the operations of the persons bound by the Amendment or request caution to secure the compliance of the consecutive transactions.

The Sanctions of Non-Compliance

As per the Article 3 of the Law, regulating the sanctions of non-compliance with the decisions and orders to be issued pursuant to the Law, the persons, who act in breach of the obligations envisaged by the Amendment shall be subject to an administrative fine from TL 3,000 (three thousand Turkish Liras) to TL 25,000 (twenty five thousand Turkish Liras) to be imposed by the Public Prosecutor.

Apart from that if the breach is found to be collusive due to comprising the intention for embezzling of foreign or Turkish currency, the persons, who commit such shall be subject to an administrative fine equal to the market worth of the value they have embezzled. The acts that only constitute an attempt of embezzling shall be fined by half of the original value.  

Yet, (i) the default interest to run starting from the date of the breach until the collection of the fine, shall also be accrued on top of the fine; (ii) the foreign currency selling rate as announced by the Turkish Central Bank on the date of the breach shall be considered for calculating the administrative fine that will be applied to breaches committed in foreign currency; and (iii) the fines shall be doubled in case of repetition of the breach.

Nevertheless, if the breach is committed to the benefit of a legal entity, the legal entity shall also be subject to the administrative fine, at the same amount. 

The Existing Situation

The most important issue that requires further clarification, with regards to the application of the Amendment, is the transactions and/or the cases to be exempted from the scope of the Amendment and such clarification is yet to be made by the Ministry. Currently, the Ministry has not expressed a stance on such, nor do they theorized a criterion or a set of rules applicable for determining the exceptions. Given these circumstances, it is construed that the Amendment will be applicable to any types of transactions that fall under the scope of the aforementioned definition provided in the Amendment and the Ministry will henceforth be rendering certain exemptions or determining certain set of rules applicable for determining the exceptions, on an as needed basis.    

Apart from that when the existing situation, especially prevailing the business to business transactions, is as above, another very recent amendment made on 31 August 2018 in the Regulation of Commercial Advertisements and Unfair Commercial Practices, envisaged a new misleading commercial activity, which would be relevant to the business to consumer transactions. According to such amendment, making raise in the sale price of the goods or services marketed to the consumers, as if such raise was triggered by the increase in foreign currency -despite not being so-, will be construed as a misleading commercial activity and be sanctioned under the related legislation (with administrative fine amounting around TL 7,000 -seven thousand Turkish Liras- and cease of operations up to 3 months). This, when read together with the Amendment, express the perception of the Turkish government aiming to avoid use (and hence the impact) of the foreign currency in the domestic market.    

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Ozdagistanli Ekici Avukatlık Ortaklığı
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Ozdagistanli Ekici Avukatlık Ortaklığı
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions