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19 November 2018

Turkey’s Ministry of Treasury and Finance redefines contracts with TL obligation

Turkish Presidential Decision No. 85 amending the Decree No. 32 Regarding the Protection of the Value of the Turkish Currency (Decree No. 32) entered into force on 13 September 2018.1

The Treasury and Finance Ministry of Turkey (Ministry) then issued, on 6 October, Communiqué No. 2018-32/51 listing both the exemptions and the transactions that require the Turkish Lira (TL) obligation on such contracts.2

On 16 November 2018, the Ministry redefined the contracts which are permitted to be concluded in foreign currency or indexed to foreign currency through Communique no. 2018-32/52.

The differences between this latest Communique and the previous Communique No. 2018-32/51 are briefly as follows:

  • The requirement for real estate rental and leasing contracts covering real estate located in free zones to be concluded in Turkish Liras has been removed.
  • Contracts indicated below will be concluded in foreign currency or indexed to foreign currency:
    • Real estate sale and real estate leasing contracts concluded by persons resident in Turkey where the parties to the contract as buyer or lessee are not Turkish citizens
    • Real estate sale and real estate leasing contracts concluded by branches, representatives, offices, liaison offices, companies owned by nonresidents (shareholding rate must be at least 50% or over directly or indirectly or jointly controlled and/or controlled) in Turkey and companies in free zones that are party for their activities in free zones, as buyer or lessee
    • Real estate lease contracts concerning the leasing of accommodation facilities certified by the Ministry of Culture and Tourism with the purpose of operating
    • Real estate lease contracts to be concluded for the leasing of duty-free shops
  • In addition to those to be executed abroad, labor contracts in which the shipmen are parties are removed from the scope of the requirement for setting contracts in TL.
  • Work contracts containing cost in foreign currency shall be concluded in foreign currency or indexed to foreign currency.
  • The wording of “engineering vehicle” has been removed from the provision which indicates that vehicle sale and leasing contracts including engineering vehicles cannot be concluded in foreign currency or indexed to foreign currency.
  • The previous Communiqué contained an arrangement requiring contracts to be redefined by the reconciliation of parties that are granted exception to be in Turkish currency or in the circumstance that the values set on the existing contracts in foreign currency or indexed to foreign currency are demanded to be redefined in TL as per the provisional Article 8, values on the contracts should be set in Turkish currency. This provision has been removed in the latest Communique.

The Communique no. 2018-32/52 enters into force as of its publication date (16 November 2018).

Endnotes

1. See EY Global Tax Alert, Turkey requires contracts between Turkish residents to be valued in Turkish Lira, dated 13 September 2018.

For additional information with respect to this Alert, please contact the following:

Kuzey Yeminli Mali Müsavirlik A.S. Istanbul, Turkey
  • Ates Konca | ates.konca@tr.ey.com
  • Gamze Durgun | gamze.durgun@tr.ey.com 

ATTACHMENT

Document ID: 2018-6346

 
 

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