Amendments to the Oil Market License Regulation ("Oil License Regulation") and Liquefied Petroleum Gases ("LPG") Market License Regulation ("LPG License Regulation") have been published in the Official Gazette No. 31505 dated 8 June 2021 ("Amendments") by the Turkish Energy Market Regulatory Authority ("EMRA"). The Oil License Regulation, which was published in the Official Gazette No. 25495 dated 17 June 2004, generally covers license acquisition processes and post-license obligations for activities subject to license such as processing, transmission, distribution, mineral oil, dealership, and transportation. In addition, activities and licensing processes in the LPG market are specifically regulated in the LPG License Regulation published in the Official Gazette No. 25938 dated 16 September 2005.

You can read the Amendments here. (Available in Turkish only).

What Has Changed?

The main change made to both the Oil License Regulation and the LPG License Regulation is that existing license holders, and real or legal persons applying for licenses must pay certain public debts to gain approval for license acquisition, amendment, or extension applications.

Here are some of the important changes described in the Amendments.

a. Public Debts Must Be Paid for License Acquisitions, Amendments and Extensions

According to the Amendments, applicants who wish to obtain a license for the first time, must not have any overdue premiums or Social Security Institution ("SSI") administrative fines and no overdue debts within the scope of the Law on the Procedure for the Collection of Public Receivables Law No. 6183 published in the Official Gazette No. 8469 dated 28 July 1953 ("Public Receivables Law"). Similarly, when existing license holders apply to EMRA for a license amendment or a license extension, it is obligatory that there are no debts from unpaid premiums or administrative fines, among other conditions, for an application to be deemed appropriate.

As per the Amendments, EMRA will request information from the SSI and the Revenue Administration regarding an applicant's debts once a license acquisition, license amendment or license extension application is received.

In cases where EMRA determines that an applicant has public debts, it notifies the applicant in writing for the payment of the debt. If the applicant fails to clear the debt within 10 days of notification by letter, their application will be deemed not to have been made. Should the debt subsequently be cleared the application process must begin again.

b. The Scope of Activities in the Oil and LPG Market

According to the Amendments, the obligation regarding the payment of public debts is not foreseen for all activities carried out under license in the oil market. This obligation is enforceable for persons who have or who are applying for licenses for distribution, bunker, mineral oil, and dealership activities in the oil market. In other words, the condition of fulfilling the payment of public debts is not sought in licensed activities such as processing, storage, transmission, and transportation.

On the other hand, this requirement must be fulfilled for all licensed activities in the LPG market such as distribution, transportation, storage, autogas dealership, LPG cylinder manufacturing, LPG cylinder maintenance and repair.

c. The Scope of Public Debts

The scope of public debt should also be evaluated separately. First of all, applicants and license holders are obliged to make premium payments that are legally required as an employer. Aside from this, administrative fines specified in cases of breach of the obligations in the Social Insurance and General Health Insurance Law No. 5510 published in the Official Gazette No. 26200 dated 16 June 2006 must be paid.

Furthermore, since no limitations are specified in the Amendments regarding receivables arising from the Public Receivables Law, an applicant or license holder's public debts, such as taxes, fees and administrative fines and their interest, will be evaluated within this scope.

d. Other Amendments

Several significant amendments regarding the Regulation on the Procedures and Principles To Be Followed in Supervision, Preliminary Research and Investigations in the Petroleum Market ("Petroleum Investigation Regulation") and the Regulation on the Procedures and Principles To Be Followed in Supervision, Preliminary Research and Investigations in the Liquefied Petroleum Gases (LPG) Market ("LPG Investigation Regulation") have also been published in the same Official Gazette.

Some important changes that have entered into force are as follows:

  • According to latter amendments, EMRA has the right to suspend license holders' activities if a criminal investigation is initiated for issuing and using misleading documents, issuing and using partially or completely forged documents, unauthorized unsealing of payment recording devices, changing the hardware or software of these devices within the scope of Article 359 of the Tax Procedure Law No. 213 published in the Official Gazette No. 10705 dated 12 January 1961 ("Tax Procedure Law") until the investigation and/or lawsuit process is completed. In other words, EMRA will stop activities at the relevant facility until it is determined that the license holders are not guilty of the crimes listed. As per the amendments, this obligation is valid for all license holders operating in the oil market but will not be applied to the LPG market.
  • Secondly, pursuant to Article 257 of the Tax Procedure Law, license holders operating in the petroleum and LPG markets are obliged to deposit 1% of the gross sales of the previous accounting period, not exceeding TRY 100 million, to the relevant tax office in order to guarantee the collection of their tax liabilities for the subsequent period. It is regulated in the amendment that the activities of license holders who do not comply with the obligation to deposit this amount may be suspended until the relevant guarantee is deposited. This obligation will apply to licensees operating in both the petroleum and LPG markets.

Conclusion

The aim of the Amendments is to facilitate and guarantee the collection of public receivables such as premiums, taxes, and administrative fines and to prevent tax crimes with sanctions that can be considered severe, such as suspending licensed activities in the oil and LPG markets.

The Amendments do not regulate how license holders' non-payment of public debts that are in dispute and pending court proceedings will affect license applications. Although it is expected that public debts that are in dispute with ongoing legal proceedings will not be taken into account, it is important that EMRA clarifies this uncertainty.

Accordingly, it is strongly recommended that license holders and persons applying for licenses in the oil market and LPG market should assess whether they have any administrative fines, or premium and tax debts owed to the SSI and the Revenue Administration before making license acquisition, license amendment or license extension applications.

This news alert concerns the domestic and international oil and LPG companies operating / to be operated in the oil and LPG markets under a license.

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.