08October2018

COMMUNIQUE RELATED TO THE DECREE LAW 32 ON PROTECTION OF TURKISH MONETARY CURRENCY HAS BEEN ANNOUNCED

REGULATION NO: 2008-32/34 REGARDING AMENDMENT ON THE REGULATION (REGULATION NO: 2018-32/51)

ARTICLE 1- (1) The abrogated article 8 of the Regulation Regarding the Decree No.32 on Protection of the Value of Turkish Currency (Regulation No: 2008-32/34) which is published in 28/2/2008 dated and 26801 numbered Official Gazette, is revised as follows.

“The Agreements in Foreign Currency and the Agreements Based on Foreign Currency

Article 8 – (1) Residents in Turkey; shall not settle the contract price in real estate sale agreements including residences and roofed working places of which subject is the real estates in the country including free zones, and other payment obligations arise from these agreements that are signed between each other, as in foreign currency or based on foreign currency.

(2) Residents in Turkey; shall not settle the contract price in real estate leasing agreements including housing premises and roofed working places of which subject is the real estates in the country including free zones, and other payment obligations arise from these agreements that are signed between each other, as in foreign currency or based on foreign currency.

(3) Residents in Turkey; shall not determine labor agreements’ contract price and other payment obligations arise from these agreements, except the ones performed abroad, in foreign currency or based on foreign currency.

(4) Residents in Turkey; shall not determine service agreements’ contract price and other payment obligations arise from these agreements, including the consultancy, brokerage and transportation, in foreign currency or based on foreign currency, with the exception of undermentioned ones.

  • a) Service agreements of which one party is not a citizen of the State of the Turkey Republic,
  • b) Service agreements under exportation, transit trade, sales and deliveries regarded as exportation and service and activities that save foreign exchange,
  • c) Service agreements within the scope of the activities made in abroad by Turkey residents.
  • ç) Service agreements regarding electronic communication which start in Turkey end abroad and start in abroad end in Turkey, signed between residents in Turkey.

(5) Residents in Turkey; shall not determine work/construction agreements’ contract price and other payment obligations arise from these agreements, in foreign currency or based on foreign currency, except for ship building works defined in the 16/12/1999 dated and 4490 numbered Law on Turkish International Ship Registry and the Law Regarding the Amendment of 491 numbered Statutory Decree.

(6) It is possible for the residents in Turkey to determine the contract price and other payment obligations in foreign currency or based on foreign currency for the agreements of chattel sales between each other except for vehicle sale agreements including heavy equipment.

(7) It is possible for the residents in Turkey to determine the contract price and other payment obligations in foreign currency or based on foreign currency, for the agreements of chattel renting between each other except for vehicle renting agreements including heavy equipment.

(8) It is possible to determine the contract price and other payment obligations in foreign currency or based on foreign currency for the sale agreements regarding software produced abroad under information technologies along with the license and service agreements regarding hardware and software that the Turkey residents will sign between each other.

(9) It is possible to determine the contract price and other payment obligations in foreign currency or based on foreign currency for the agreements of financial leasing (leasing) of the ships defined in 4490 numbered Law on Turkish International Ship Registry and the Law Regarding the Amendment of 491 numbered Statutory Decree.

(10) It is possible to determine the price of financial leasing (leasing) agreements in foreign currency under the scope of Art. 17 and 17/A of the Decree no.32.

(11) It is possible to determine the contract price and other payment obligations in foreign currency or based on foreign currency for the labor contracts that one party is the residents in Turkey who do not have any citizenship link with the State of Turkey Republic.

(12) It is possible to determine the contract price and other payment obligations in foreign currency or based on foreign currency for the agreements that one party is public institution and organizations along with the Turkish Armed Forces Foundation companies, except for the agreements of real estate sale and real estate leasing.

(13) Provided that being under the scope of performance of the tenders, agreements in foreign currency or based on foreign currency and international agreements that one party is the public institutions and organizations; it is possible to determine the contract price and other payment obligations arise from the agreements except for the real estate sale, real estate leasing and labor contracts that the contractors sign with third parties.

(14) It is possible to determine the contract price and other payment obligations arise from the agreements that banks are parties due to the transactions under the scope of the 4749 numbered and 28/3/2002 dated Law on Public Finance and Regulation of Debt Management by the Ministry of Treasury and Finance.

(15) Without prejudice to the provisions of the Decree no.32 Regarding the Protection of Turkish Currency, it is possible to determine the capital market instruments (including foreign capital market instruments and depositary receipts and foreign investment funds) in foreign currency and the obligations regarding exportation, purchase and sale and the transactions, within the framework of the 6362 numbered Capital Market Law and regulations based on the mentioned Law

(16) It is possible to determine the contract price and other payment obligations in foreign currency or based on foreign currency for the labor and service agreements of which parties are the non-residents’ branch office, agency, office, liaison office, the companies that the non-residents have fifty percent or more share ownership directly or indirectly, and free zone companies under their operations in free zones.

(17) Passengers resident in Turkey, airline companies operate in carrying mail and cargo; companies that serve technical care for air freight vehicles, their motors and their parts and pieces; institutions with the title of public or private legal entities that obtains work permit or authorized to provide ground services in airports under civil aviation legislation and their established businesses and companies and partnerships that they have 50% or more share in the direct or indirect capital, can make agreements except for real estate sale, real estate leasing and labor contracts in foreign currency or based on foreign currency with the residents in Turkey.

(18) As per this clause, it is not possible to determine the prices that took place in securities which will be drafted under the agreements of which contract price and other payment obligations cannot be in foreign currency or based on foreign currency.

(19) Agreements that are indexed to precious metals and/or commodities and/or foreign exchange indirectly in international markets, shall be deemed as foreign currency indexed agreement under the practice of Article 4(g) of 32 numbered Decree.

(20) Abroad branches, agencies, offices, liaison offices, funds with the operation and management control, companies with fifty percent or more share ownerships along with the companies with direct or indirect ownership of Residents in Turkey, shall be deemed as resident in Turkey under the implementation of Article 4(g) of 32 numbered Decree on the Protection of Turkish Currency.

(21) As per this clause, the agreements which are included in the scope of exception but executed before the effective date of Temporary Article 8 of the 32 numbered Decree on the Protection of Turkish Currency, shall be an exception of the mentioned temporary article.

(22) The vehicle leasing agreements which are signed before the effective date of the Art. 8 of 32 numbered Decree on the Protection of Turkish Currency, including the agreements for heavy machinery, shall be an exception of the mentioned temporary article.

(23) As per this clause, the agreements of which contract price and other payment obligations cannot be determined in foreign currency or based on foreign currency, must be repriced as Turkish lira by the parties due to the Art.8 of 32 numbered Decree on the Protection of the Turkish Currency.

(24) As per this article, if there shall be no consensus on determining the contract prices and other payment obligations arise from the agreements which cannot be settled in foreign currency or based on foreign currency, as Turkish liras under Temporary Art. 8 of the 32 numbered Decree on the Protection of the Turkish Currency; the price of the agreements in foreign currency or based on foreign currency, shall be determined by increasing with taking monthly change rates as a basis of consumer price index (CPI) which is designated by Turkey Statistics Institution, as of the date of 02/01/2018 to the rearrangement date, of the Turkish lira equivalent of the amount which is calculated by using the indicative effective selling currency of the Turkey Republic Central Bank on 2/1/2018. The prices determined in foreign currency or based on foreign currency in the leasing agreements for the residence and roofed working places signed before the effective date of the Temporary Art. 8 of the 32 Numbered Decree on the Protection of Turkish Currency, shall be determined as Turkish lira for two years due to the first paragraph of this clause.

However, valid for one year starting from the end of the leasing year in which the Turkish lira repricing is made; if there will be no consensus on repricing the leasing price determined as Turkish lira due to the mentioned paragraph, it shall be determined by increasing with taking monthly changing rates as a basis of consumer price index (CPI) which is designated by Turkey Statistics Institution ,as of the date of repricing to the end of the leasing year on which the repricing is made. If the next leasing year is a leasing price with Turkish liras, and there will be no consensus on repricing, the leasing price valid on the previous leasing year shall be determined by increasing with taking monthly changing rates as a basis of consumer price index (CPI) which is designated by Turkey Statistics Institution and the determined leasing price in Turkish currency, shall be valid until the end of two years mentioned within this clause.

This clause shall not be applicable for the owed debts collected or delayed in the agreements of which contract price or other payment obligations cannot be determined in foreign currency or based on foreign currency.

(25) In this clause, the prices in the agreements shall be settled in Turkish lira currency in case of a demand by the parties as drafting the new agreements in Turkish lira currency or in present foreign currency or repricing in Turkish lira currency for the contract price of the agreements in foreign currency under Art.8 of the 32 numbered Decree on the Protection of Turkish Currency."

ARTICLE 2 – This regulation shall be entered into force on the date of issue.

ARTICLE 3 – The provisions of this regulation shall be executed by the Ministry of Treasury and Finance.

Posted in Exchange Legislation, Protection of the Value of Turkish Currency Regulations

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