Stamp Duty on Amendment Agreements Made to Comply with Foreign Currency Restrictions

By a Presidential decree dated 13 September 2018, restrictions were introduced against denominating prices in agreements for the lease and sale of real estate, construction, employment, and services in foreign currency. Agreements with prices denominated in foreign currency or indexed to the foreign currency were required be converted to Turkish Lira within thirty days from the effective date of the decree. One of the open questions on the issue was whether amendment agreements signed to convert agreement prices into Turkish Lira were going to be subject to stamp duty.

The Revenue Administration has answered this question by publishing the Circular on Stamp Duty Arising From Agreements Converted to Turkish Lira numbered DV-22/2018-1 ("Circular") on 22 November 2018.

Under the current rules, in the context of agreements to amend the price of an existing agreement, stamp duty is assessed solely on the amount of the increase in the agreement price. The Circular introduces some exceptions to this rule which apply to amendments made by reason of the decree.

As per the Circular, amendments are not subject to further stamp tax if:

i. the parties have solely amended the contract price and have not made any alterations in the remaining provisions of the agreement;

ii. a reference has been made to the original agreement; and

iii. the amended, Turkish Lira-denominated price does not exceed the Turkish Lira equivalent of the original, foreigncurrency-denominated price, as assessed at the exchange rates effective as of the date of the amendment.

On the other hand, where the amended, Turkish Lira-denominated price does exceed the Turkish Lira equivalent of the original, foreign currency-denominated price, then the amount in excess will be subject to stamp tax. An exception to this latter rule is that, if the stamp tax already paid on the original agreement was paid at the ceiling rate set by Revenue Administration, then the amount in excess will be exempt from stamp tax.

If the amendment does not solely adjust the contract price but also makes other alterations, then the amendment agreement becomes subject to stamp tax rules of general applicability.