Turkey: What Amendments Are Introduced Regarding Branding Supports For Foreign Exchange Earning Service Sectors?

Pursuant to Presidential Decision No. 5468, the Decision Amending the Decision on Branding Supports for Foreign Exchange Earning Service Sectors, which envisages radical changes in the content of the Decision on Branding Supports for Foreign Exchange Earning Service Sectors, was published in Official Gazette No. 31816 dated 21 April 2022, and entered into force.

Recent development

Pursuant to Presidential Decision No. 2564, the Decision on Branding Supports for Foreign Exchange Earning Service Sectors ("Decision") was published in Official Gazette No. 31132 dated 20 May 2020. The Decision regulates the procedures and principles regarding the expenses related to the branding activities of companies operating in the foreign exchange earning service sectors and resident in Turkey, expenses related to the financial support to be provided within the scope of the TURQUALITY® Program, and all kinds of activities and organizational expenses for the entry and retention of Turkish trademarks in the market.

The Decision Amending the Decision on Branding Supports for Foreign Exchange Earning Service Sectors, which was published in the Official Gazette No. 31816 dated 21 April 2022 ("Amendment") introduces significant updates, especially in terms of the amount of financial support to be provided and the details of the TURQUALITY® Support Program. You can find the Amendment here.

What are the amendments envisaged in the Decision?

• Article 9 of the Decision is revised and updated in terms of the rate and maximum amount of financial support in Turkish lira for expenses incurred by the cooperation organizations within the scope of the project they will submit to the Ministry of Trade ("Ministry") in order to promote the service sectors in foreign markets; and expenses related to advertising, promotion and marketing expenditures, consultancy and market research studies, and reports that are specified in the Circular on Enforcement Principles of the Amendment ("Circular"). Two projects of cooperation organizations can be supported at the same time.
• Article 5 of the Amendment envisages important revisions in Article 10 of the Decision titled "Trademark Support Program", and thus introduces radical changes about the extent and the maximum amount of financial support in Turkish lira that the beneficiaries included in the Trademark Support Program and the companies/organizations authorized to spend will be supported. Pursuant to the subparagraphs added to the first paragraph of the said article:
• • Expenses specified in the Circular for participation in domestic events related to branded products/services included in the scope of support will be supported by 50% and a maximum of TRY 300,000 per event.
  • Agency commission expenses regarding the branded products/services included in the scope of the support and the countries they have determined as the target market and approved by the Ministry will be supported at the rate of 50% and a maximum of TRY 2.4 million per year.
  • Membership expenses to international organizations determined by the Ministry for the purposes of ensuring visibility in the international market will be supported by 50% and a maximum of TRY 1.2 million per year.
  • Expenses for placement of branded products/services included in the support into movies, documentaries, TV series, animation films and program formats, and digital games published abroad will be supported at the rate of 50% and a maximum of TRY 1.4 million per year.
• Article 6 of the Amendment envisages important revisions in Article 11 of the Decision titled "TURQUALITY® Support Program", and thus introduces fundamental changes regarding the extent and the maximum amount of financial support in Turkish lira that the beneficiaries included in the TURQUALITY® Support Program and the companies/organizations that are authorized to spend will be supported. Pursuant to the subparagraphs added to the first paragraph of the said article, the below listed expenses of the beneficiaries included in the TURQUALITY® Support Program and the companies/organizations authorized to spend will be supported by 50%.
• • Expenses specified in the Circular for participation in domestic events related to branded products/services included in the TURQUALITY® Program
  • Agency commission expenses for the countries determined as the target market and approved by the Ministry regarding the branded products/services included in the TURQUALITY® Program
  • Membership expenses to international organizations determined by the Ministry for purposes of ensuring visibility in the international market
  • Expenses for the placement of branded products/services included in the TURQUALITY® Program to movies, documentaries, TV series, animation films and program formats, and digital games that are screened abroad
• Article 12 of the Decision has been updated, and thus the Turkish Exporters Assembly and unions authorized by the Ministry will be supported by a maximum of TRY 180 million and 100% annually for various expenses and payments oriented for the implementation of the TURQUALITY® Program.
• Pursuant to the Amendment, Article 16 of the Decision was revised, accordingly, beneficiaries are required to have a Strategic Business Plan study carried out by consultancy firms authorized by the Ministry, for one time only, regarding their trademarks included in the Trademark/TURQUALITY® Support Program in order to benefit from the support. The Strategic Business Plan covers a period of five years from the date the relevant trademark is included in the scope of support. Expenditures made by the beneficiaries pursuant to paragraph 1 of Article 16 are supported for one time only, at a rate of 50% and a maximum of TRY 2.4 million. In order to support the expenditure on target markets determined by the beneficiaries, each target market has to be analyzed and approved by the Ministry.
• Pursuant to the amendments envisaged in the second paragraph of Article 19 of the Decision, expenditures made by the company/organization residing in Turkey or abroad with the beneficiary, whose organic bonds with the beneficiary have been authenticated and authorized to spend by the Ministry, for the trademark included in the support, may also be considered within the scope of the support. However, support payment has to be made to the beneficiary in any case.
• Pursuant to the Amendment, Article 21 of the Decision was revised, accordingly, the beneficiary undertakes, within two months at the most, that the trademark supported within the framework of the Trademark/TURQUALITY® Support Program will continue its operations for institutionalization within the scope of the program and branding activities in target markets and will continue to act in line with the aims of the program in case majority of the beneficiary's shares (more than 50%) are sold after being included in the program. Unless otherwise determined by the Ministry or if the said undertaking is not submitted within the period, the relevant trademark is excluded from the scope of the support program and unconcluded applications are rejected. Foreign trademarks purchased are not supported within the framework of this Decision.
• The phrase "US Dollar" in Article 28 of the Decision, titled "Payment Transactions", is removed from the scope of the said article. An additional paragraph has been added to the article in question, which states that the support limits within the scope of the Decision will be updated at the rate of (Average CPI + Average D-PPI)/2 at the beginning of each calendar year.
• All paragraphs of Article 30 of the Decision are amended, the most comprehensive ones of which are envisaged in paragraphs 1 and 2. In accordance with the said paragraphs, the performance audit for the relevant trademarks of the beneficiaries included in the Trademark/TURQUALITY® Support Program is carried out within the framework of the procedures and principles set forth in the Circular. Furthermore, beneficiaries included in the Trademark/TURQUALITY® Support Program has to set forth sufficient performance as a result of performance audits in order to continue to benefit from the support for their respective trademarks.
• Article 31 of the Decision, titled "Sanction", is remarkably detailed and updated. Accordingly:
• • If it is determined that a misleading document has been submitted or a statement or commitment has been made by the beneficiaries or cooperation organizations within the scope of the Decision, the application file in question will not be taken into consideration. The beneficiary or the cooperation organization cannot apply for support for its operations or expenditures for a six-month period following the notification date of the letter conveying that its file will not be taken into consideration. In addition, support application files that have been submitted before the said notification date but have not been finalized yet will be rejected.
  • Support payments within the scope of the Decision, which are determined to be unfairly received and/or misused, are collected from the relevant parties in accordance with the provisions of Law No. 6183 on the Procedure for the Collection of Public Receivables, dated 21 July 1953. The beneficiary or the cooperation institution, about which proceedings have been initiated pursuant to the provisions of paragraph 2, cannot apply for support for its operations or expenditures for a period of one year following the notification date of the letter concerning repayment. In addition, support application files that have been submitted before the said notification date but have not been finalized yet will be rejected.
  • In case of repetition of the acts listed in the first or second paragraphs, all support applications of the beneficiary or cooperation organization within the scope of the Decision are rejected, and the beneficiary or cooperation organization is excluded from the scope of support.

Conclusion

The Amendment introduces significant changes in the rates and maximum amounts of support to be provided, especially within the framework of the Trademark Support Program and TURQUALITY® Support Program. It also integrates into the scope of the Decision the updated versions of these amounts in Turkish lira (previously stated in US dollars). Additionally, other matters such as sanctions to be applied and the scope of the Ministry's authority are also amended comprehensively.

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.