Current Status Regarding Regulations of Foreign Currency Transaction Prohibitions
The Presidential Decree No. 85, issued on September 12, 2018 Article 1 added the following paragraph to the Decree No. 32, issued on August 7, 1989 Article 4. ‘Residents in Turkey cannot determine a foreign currency or indexed price for all kinds of contract fee and related payments on real estate, leasing, business, service and work among themselves, except as determined by the Ministry.’
Provisional Article 8 has been added to the Decree No. 32, in accordance with Article 2 of Decree No.85 as follows:
“Within thirty days from the enforcement date of paragraph (g) of Article 4 of this Decree, contracts which are agreed and enforced in foreign currency must be revised. Contract fee and other payments must be determined in Turkish currency by the parties, except as determined by the Ministry.
Upon the criticising the uncertainty of the appendix, the Ministry issued a statement regarding frequently asked questions. Additionally, the Ministry issued a communique (‘The Communique’) no 2018/32-52 called the Amendment of the Decree No.32 on Protection of the Value of Turkish Currency on November 16, 2018. By virtue of Article 1 of The Communique, Article 8 of the communique regarding the Decree No. 32 has been changed. Overall, the following issues have been mentioned in the amendments:
- Residents in Turkey cannot determine a foreign currency in the contracts regarding real estates which are located in Turkey, leasing including residential and workplaces. This ruling is obligatory on the contract fee and related payments.
- The contract fee and related payments of financial leasing contracts for ships defined in the Turkish International Ship Registry Code No. 4490 and the Code for the Amendments on the Decree No. 491 can be determined in foreign currency.
- Residents in Turkey cannot determine the foreign currency in employment contracts and related payments except the contracts which will be enforced abroad and contain seafarers as a party.
- It is possible to determine the contract fee and related payments in foreign currency or indexed to foreign currency in the scope of contracts and international agreements to which public institutions and organizations are a party, except real estate contracts and employment contracts. The parties of these contracts may be a contractor or an attendant firm and third parties.
- Residents in Turkey can determine the foreign currency in sales contract fee and related payments regarding software produced abroad within the scope of Information Technologies, and the licence and service contract price for hardware and software produced abroad.
- Residents in Turkey cannot determine the foreign currency in service contracts’ fee and related payments including consultancy, brokerage and transportation except the list below.
a) The service contracts that contain a party who does not have Turkish citizenship.
b) Service contracts consist within the scope of export, transit trade, sales and deliveries deemed to be exports and foreign currency earning services and activities.
c) Service contracts of residents in Turkey, within the scope of the activities will be carried out abroad.
d) Service contracts which begin in Turkey but end overseas, begin overseas but end in Turkey or begin and end overseas that made among residents in Turkey.
Another development is the amendment by the Decree No. 2182 published on Official Gazette on March 3, 2020. Article 1 of the Decree made amendments as the following paragraph. “Standard unprocessed precious metals, including those carried out within the scope of the Inward Processing Regime Decision, can only be imported with the Central Bank and Precious Metals, without prejudice to the provisions of its own legislation. Intermediary firms that are members of the Precious Metal Exchange must deliver standard and non-standard unprocessed precious metals to the Exchange within three working days. However, there is no requirement to deliver processed precious metals that imported in regard to the Inward Processing Regime Decision to the Exchange within three working days. Even so, the intermediary institution has to inform the Exchange by writing a notification within three working days.” In addition, a new clause related to the amount of the precious metals has been added as follows. “d) A passenger can bring five kilograms of standard unprocessed gold to the country within the principles that are determined by the Ministry.”
The most recent development is the announcement of the Ministry of Treasury and Finance published on its website on October 12, 2020. The announcement includes the following paragraph. “As known, December 9, 2018, issued Official Gazette contains the amendments placed by No.85 Presidential Decree on the Communique No.32 on the Protection of the Value of Turkish Currency. According to aforementioned regulations, if the contracting parties cannot settle an agreement on using Turkish currency, the principles regarding the rate of the increase will be determined as to Turkish lira in the housing and workplace leasing agreements during the two- year transition period. If the parties cannot agree on the rate of increase after the expiration of the two-year transition period, Article 344 of the Code of Obligations no. 6098 will be applicable to them. After the expiry of the two-year period, it is not possible to restart the implementation of the prices in foreign currency, indexed to foreign currency or to determine again in foreign currency. In the case of contrary activities, related sanctions of foreign exchange rules will be applied.”