Business Law

A NEW OBLIGATION TO MAKE PAYMENTS IN TURKISH LIRA HAS BEEN INTRODUCED BY THE AMENEDMENT CONCERNING CONTRACTS CONCLUDED IN FOREIGN CURRENCY

A very important change has occurred in practice regarding contracts concluded in foreign currency with “Communiqué (No: 2022-32/66) amending the Communiqué concerning the Decree/Decision Numbered 32 on the protection of the Value of Turkish Currency (Communiqué No: 2008-32/34)” (“Communiqué”) which has entered into force by being published in the Official Gazette dated 19.04.2022 and numbered 31814.

As it is known; it was possible for Turkish residents to decide the contract price concerning movable property sales contracts (except vehicle sales contracts) and other payment obligations arising from such contracts concluded among themselves in foreign currency or indexed in foreign currency. However, the fulfilment and acceptance of payment obligations in “Turkish currency” (which is the subject of such contracts) have become obligatory with the amendments brought by the Communiqué.  There is no exception available that would still make it possible to affect the payment in foreign currency within the framework of the regulations introduced by the Communiqué and all commercial goods in the nature of “movable property” will also be evaluated within this scope.

Pursuant to an additional regulation made within the scope of the Communiqué; it is possible to determine, pay and accept in foreign currency or indexed to foreign currency the contract price and other payment obligations arising from contracts (other than real estate sales and real estate leases) to which public institutions and organizations or Turkish Armed Forces Foundation companies are a party.

It is also crucial to state that no amendments have been made regarding the previously introduced prohibition of performing transactions in foreign currency concerning the lease of residential and commercial premises and the aforementioned prohibition is still in force.

As the merchants encountered various problems with both their customers  suppliers, and banks regarding the practical effects of such amendment after the Communiqué has been published in the Official Gazette on 19.04.2022, Ministry of Treasury and Finance (“the Ministry”) made an additional announcement on 19.04.2022 concerning the Communiqué. The following issues are provided/indicated in this announcement;

  • The condition of satisfying and accepting payment obligations in Turkish currency is not sought within the framework of negotiable instruments in foreign currency that entered into circulation before the effective date of the Communiqué within the scope of the performance of the movable property sales contracts concluded between the parties before 19.04.2022.
  • Payment obligations within the scope of invoices issued before 19.04.2022 are not required to be performed and accepted in Turkish currency.

 Within the scope of the announcement made by the Ministry; it is comprehended that The Communiqué will be valid/effective concerning transactions which was performed as of the publication date 19.04.2022 and will not be applied retroactively and  old-dated invoices in foreign currency will still be able to be paid in foreign currency. The aforementioned announcement can be accessed from the link; https://www.hmb.gov.tr/haberler/turk-parasi-kiymetini-koruma-hakkinda-32-sayili-karara-iliskin-2008-32-34-sayili-tebligde-degisiklik-yapilmasina-dair-2022-32-66-sayili-teblige-iliskin-duyuru.

We would like to purport that crucial administrative sanctions have been determined within the scope of “The Protection Of The Value Of Turkish Currency Law (“Law”) concerning people who do not comply with the aforementioned obligations. Pursuant to Article 3 of the Law; an administrative fine between TRY-14,211.00 and TRY- 118.555.00 will be imposed for the year 2022, separately concerning each party of the contracts/transactions that violate the Communiqué and in case of repetition of the misdemeanour, such penalties will be imposed as doubled. It is regulated subsequently in the same article that; in case such misdemeanours are committed in favour of a legal entity, the same amount of administrative fine will be imposed on the relevant legal entity and in case the subject matter of the misdemeanour is related the foreign currency, calculation of the administrative fine will be based on the “selling rate of exchange” of the Central Bank Of The Turkey for such currency as of the date of the misdemeanour.

Buse Mercan, Attorney At Law

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