MANDATORY USE OF TURKISH LIRA IN MOVABLE SALE CONTRACTS
Republic of Turkey Ministry of Treasury and Finance (“Ministry”) has amended Article 8(9) of the Communiqué numbered 2008-32/34 regulating movable sale contracts with the Communiqué numbered 2022-32/66 Amending the Communiqué numbered 2008-32/34 on the Decree No. 32 Regarding the Protection of the Value of the Turkish Currency (“the Communiqué”), which was published on the Official Gazette dated April 19, 2022 and numbered 31814. The Communiqué entered into force at the publication date.
With the amendment made, the sentence of “However, it is mandatory that the payment obligations subject to those contracts are fulfilled and accepted in Turkish Lira” was added at the end of Article 8(9) of the Communiqué.
The Communiqué states that persons residing in Turkey may determine the contract price and other payment obligations in foreign currency or indexed to foreign currency in movable sale contracts to be concluded between themselves and that only vehicle sale contracts are excluded from the scope of this exception. According to the amendment, it is obligatory to make and accept the payment in Turkish Lira on the actual payment day for the movable sale contracts with the exception of vehicles sale contracts.
Following the publication of the Communiqué, Ministry further published a press announcement on the subject matter on April 21, 2022. According to the announcement:
- It shall not be obliged to fulfil or accept the payment obligations in Turkish Lira as long as those obligations arose from movable sale contracts executed between the parties before April 19, 2022 and those obligations are within the scope of negotiable instruments in foreign currency which got into circulation before April 19, 2022, and
- It shall not be mandatory to fulfil or accept the payment obligations in Turkish Lira as long as those obligations arose from invoices that are issued before April 19, 2022.
In addition, there are no provisions or explanations as to which date would be considered for determining the currency exchange rate for Turkish Lira payments in relation to movable sale contracts in which the payment obligations are determined in foreign currency. Thus, it is advised that a provision in this context should be included in the contract.
In case of any violations of the Communiqué, as per the revaluation rates set forth under Article 3(1) of the Law on the Protection of the Value of Turkish Currencyeach party of the contract shall pay administrative fine of approximately 11.000 TRY up to 100.000 TRY. Therefore, in order to avoid any sanction, it is recommended not to include provisions on the same payment basis in such contracts.
In conclusion; in the movable sale contracts signed between the parties whom are resident in Turkey, except for the vehicle sales contract, the payment obligation can be specified in foreign currency or indexed in foreign currency. However, the payment must be made in Turkish Lira. It is recommended that the contracts to be made in this regard could include a provision regarding the date that the exchange rate will be taken into account and not include provisions on the same payment basis.