The payments in foreign currencies or indexed foreign currency have been prohibited on September 13, 2018 by the Presidential Decree which is amending The Decree Numbered 32 on Protection of the Value of Turkish Currency. The Amendment Communique (No.2018-32/51) which clarifies the new implementation and exceptions has been published in the Official Gazette on October 6, 2018 by the Ministry of Treasury and Finance.

The provisions of the Communique which are related to the some of the most frequent agreements are shown below;

  • Real Property Rental & Sales Agreements
    • The contract prices and other payment obligations between the residents in Turkey cannot be agreed upon foreign currency or indexed foreign currency for the rental and sales agreements about the real properties within the borders of Turkey.
  • Movable Property Rental & Sales Agreements
    • It is possible to determine a contract price or a contractual payment obligation in foreign currency or indexed foreign currency for rental and sales of the movables. (excluding vehicles and construction equipment)
  • Labor Contracts
    • The contract price and other payment obligations of a labor contract cannot be agreed upon foreign currency or indexed foreign currency unless the work would be performed abroad.
    • It is possible to determine the contract price and other payment obligations in foreign currency with Turkish residents who do not have Turkish citizenship (expat contracts).
    • If one of the parties is a branch/representation/contact office of a non-resident or a company that 50% of its shares are directly or indirectly owned by a non-resident or a company conducts its activities in the free trade zones, the contract price or other contractual payment obligations can be agreed upon foreign currency or indexed foreign currency in labor contracts.
  • Service Agreements
    • Turkish residents cannot determine the contract price in foreign currency or indexed foreign currency in the service agreements including consultancy, brokerage and transportation unless;
      • one of the parties is not citizen of the Republic of Turkey,
      • the service agreement is made for exportation, transit trade or services that bring foreign currencies,
      • the service contracts regarding the activities that carried out abroad,
      • the service agreement related to electronic communication that starts in Turkey and ends abroad or electronic communications that starts abroad and ends in Turkey.
    • If one of the parties is a branch/representation/contact office of a non-resident or a company that 50% of its shares are directly or indirectly owned by a non-resident or a company conducts its activities in the free trade zones, the contract price or other contractual payment obligations can be agreed upon foreign currency or indexed foreign currency for service agreements.
  • Ship Construction Agreements
    • The contract price cannot be determined in foreign currency in a work agreement unless the agreement is made for construction, repairing or maintenance of the ship which defined in the Law no: 4490.
  • IT Software-Hardware Sales & License & Service Agreements
    • Contract price and other payment obligations for sales of softwares produced in a foreign country or the license or service agreements regarding software and hardware can be determined in foreign currency or indexed foreign currency.

The Communique regulates other significant agreements that needs to be examined carefully such as aerial transportation agreements and agreements executed by banks in relation to transactions of Ministry of Treasury and Finance, etc.

The Communique carries some uncertain provisions within its content and in terms of its spelling. We expect that additional legal arrangements should be made or the subject will be shaped by the implementation in order to clarify the regulation in the following days.