Regulation on the Prohibiton of Foreign Currency Agreements Between Turkish Residents 21 September 2018
Presidential D No. 85 (“Decision No. 85”) dated September 12, 2018 as published in the Official Gazette and entered into force on September 13, 2018 made a number of important amendments to the Decree No. 32 on Protection of the Value of Turkish Currency (“Decree No. 32”) regarding the certain type of agreements executed between Turkish residents. According to the Decision No. 85, contractual value and any other payment obligations specified in belowmentioned types of agreements executed between Turkish residents must be denominated in Turkish Lira (“TL”). Therefore, as of 13 September 2018, it will no longer be possible to use foreign currency or index TL to foreign currency in determining the contractual value and payment obligations.
Not only the new agreements which are subject to the Decision no: 85, but also the ones that were executed prior to the date of the Decision No:85 shall be amended in such a manner as to convert the foreign currency amounts indicated under such agreement into Turkish Liras shall must be redefined by the parties in TL within 30 days of 13 September 2018.
Indeed, the Decision No. 85 does not specify any exchange rate to be used for the conversion of foreign currency amounts in existing agreements to TL and leaves it as a matter to be renegotiated between the parties. At this point, it should be noted that such prohibition shall be applicable for the existing agreements parties of which were Turkish residents on the relevant date of execution. On the other hand, the term of ‘Turkish residents’ include all real persons and legal entities residing or incorporated in Turkey. Accordingly, companies incorporated in Turkey by foreign persons or foreign entities are also prohibited to use foreign currency in determining the contractual value and payment obligations.
The agreements falling under this restriction are as follows:
- The sale and purchase of any movable and immovable property
- Leasing of all kinds of movable and immovable property including vehicles
- Leasing and financial leasing agreements,
- Employment, service and work agreements.
The Decision No:85 empowers the Ministry of Treasury and Finance (“Ministry”) to bring exceptions to this requirement. By the press release dated 17 September 2018 and published through the website of the Ministry, the Ministry states that the agreements executed between the Turkish residents that are entitled to use foreign currency loans without any restrictions in accordance with the regulations contained in Decree No. 32 shall be exempted and the scope of such regulation shall be determined as soon as possible by taking into account the situation of the economic activities.
The Communiqué of the Treasury and the Ministry of Finance is expected to be published.
Türkçe Versiyonu İçin
