Turkey: Turkey Announces Further Details And Exemptions For Currency Controls On Foreign Currency Contracts

Turkey has announced further details, exemptions and clarifications for recently introduced rules restricting foreign currency or foreign currency indexed payment obligations in contracts between parties residing in Turkey. These entered into force on 13 September 2018 by amending Decree Number 32 on Protection of Value of Turkish Currency (more).

Restricted Contract Types

The following contract types executed by and between parties residing in Turkey cannot have foreign currency or foreign currency indexed contract prices or other payment obligations:

  • Real estate sales agreements for properties located in Turkey (including residential and workplace sales, as well as real estate located in free zones).
  • Real estate rental agreements for property located in Turkey (including residential and workplace sales, as well as real estate located in free zones).
  • Labor agreements (except for those which will be performed abroad).
  • Service agreements including consultancy, brokerage, and transport agreements, except for the agreements relating to:

    • A non-Turkish citizen.
    • Exports, transit trade, export sales and deliveries and activities that result in earning of foreign exchange.
    • Activities to be carried out abroad by persons residing in Turkey.
    • Electronic communication services which either:

      • Start abroad and end in Turkey, or
      • Start in Turkey and end abroad.
  • Work/construction agreements (excluding construction, repair and maintenance of ships defined in Law Number 491 Amending the Decree Law and the Turkish International Ship Registry Law Number 4490 on 16 December 1999).
  • Sales or rental of vehicles and construction vehicles, excluding agreements made before 13 September 2018.

Exemptions from the Restrictions

The following contract types executed between parties residing in Turkey are not included in the scope of the foreign currency limitations. Thus, these contract types can be made in a foreign currency or be indexed to a foreign currency:

  • Movable asset rental agreements (excluding vehicle rent and heavy machinery rental agreements).
  • Movable rental sales agreements (excluding vehicle sales and heavy machinery rental agreements).
  • Sales agreements for software produced abroad in the context of information technologies and license and service agreements relating to hardware and software.
  • The following lease agreements:

    • Financial leasing agreements regarding ships defined in Law Number 491 Amending the Decree Law and the Turkish International Ship Registry Law Number 4490 on 16 December 1999.
    • Financing leasing agreements permitted under Articles 17 and 17/A of Decree Number 32.
  • Labor agreements for non-Turkish citizens residing in Turkey.
  • Agreements executed by state institutions and organizations and the Turkish Armed Forces Foundation (except sale or rental of real estate).
  • All agreements made by contractors of state-owned institutions, provided these relate to performance of a tender, agreement or international agreement awarded by the state based on a foreign currency or indexed to a foreign currency (except sale or rental of real estate or labor agreements with third parties).
  • All agreements entered by banks for transactions carried out under the Law on the Regulation of Public Finance and Debt Management number 4749 dated 28 March 2002 carried out by the Ministry of Treasury and Finance.
  • Capital market instruments (including foreign capital market instruments, warehouse certificates and foreign investment fund shares) and export, purchase and sale of capital market instruments (without prejudice to the foreign exchange rules of Decree Number 32 on The Protection of The Value of Turkish Currency).
  • Labor and service agreements entered into by:

    • Branches, representation offices, offices, or liaison offices in Turkey for persons residing outside Turkey.
    • Companies held by persons residing outside Turkey with at least 50% direct or indirect shareholding.
    • Companies located in free zones within the scope of their activities in the free zone.
  • All agreements (except sale or rental of real estate and labor agreements) entered into by the following parties:

    • Commercial airline operators located in Turkey engaged in passenger, freight or mail carriage.
    • Companies providing technical maintenance services for air transport vehicles, engines and related parts.
    • Persons authorized for ground handling services in airports within the scope of civil aviation legislation (including businesses and companies incorporated by the said institutions and their partners with direct or indirect ownership of at least 50%).

Notable Provisions

  • Negotiable instruments issued within the scope of agreements within the scope of foreign currency restrictions are also prohibited from being issued in foreign currencies.
  • The price of agreements within the scope of the foreign currency restrictions cannot be indexed to precious metals or commodities. The price of these are determined in international markets based on foreign currencies. Precious metals and commodities are considered as a "foreign currency indexed agreement".
  • Indirect currency indexing is prohibited.
  • The following entities abroad will be regarded as "residing" in Turkey:

    • Branches, representation offices, offices, liaison offices, operated or managed funds of persons residing in Turkey.
    • Companies with at least 50% shareholding by persons residing in Turkey.
    • Direct or indirectly held companies of persons residing in Turkey.

Determining the Turkish Lira Prices

  • Foreign currency or foreign currency indexed prices for contracts which fall within the scope of the restrictions must be re-determined in Turkish Lira by their parties upon mutual agreement by 13 October 2018.
  • If the parties fail to mutually agree, the foreign currency or foreign currency indexed prices will be re-determined as follows:

    • The Turkish Lira equivalent of the foreign currency price will be determined based on the indicative effective selling rate announced by Turkish Republic Central Bank applicable on 2 January 2018.
    • The Turkish Lira amount will increase on a monthly basis starting from 2 January 2018 until the redetermination date, based on the monthly change ratio in the consumer price index (TÜFE) determined by the Turkish Statistical Institute.
  • For residential and workplace rental agreements entered before 13 September 2018:

    • Foreign currency or foreign currency indexed prices must be determined in Turkish Lira in accordance with the above rules for a period of two years as of 13 September 2018.
    • If the parties cannot mutually agree:

      • The rent determined in accordance with the above will increase based on the monthly rate of change of the consumer price index (TÜFE) determined by the Turkey Statistical Institute as of the determination date and until the end of the rental year which the determination was made. The rental fee will apply for one year, starting from the end of the next rental year which the determination was made.
      • The rental fee for the following rental year will be determined by increasing the rent of the previous year based on the monthly rate of change of the consumer price index (TÜFE). The new price will apply until the end of the foregoing two-year period.
  • Provisions regarding re-determination will not apply for collected or defaulted receivables.

The Communiqué Amending the Communiqué regarding Decree Number 32 on The Protection of The Value of Turkish Currency was announced in Official Gazette number 30557 on 6 October 2018, entering into force on the same date. Please see this link for the full text (only available in Turkish).

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
Dr. E. Seyfi Moroğlu, LL.M.
E. Benan Arseven
C. Hazal Baydar, LL.M.
Similar Articles
Relevancy Powered by MondaqAI
Kolcuoglu Demirkan Kocakli Attorneys at Law
Eryürekli Attorney Partnership
 
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
Kolcuoglu Demirkan Kocakli Attorneys at Law
Eryürekli Attorney Partnership
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