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11/09/2021 https://www.esin.av.tr/wp-content/themes/esin/images/esin.jpg

FX Payment Ban on License and Service Agreements for Software and Hardware Developed in Turkey Clarified

Legal Alerts
IT & Communications
General

Recent Development

The Ministry of Treasury and Finance (“Ministry“) published a press release regarding agreements denominated in foreign currencies or indexed to foreign currencies, which included answers to frequently asked questions (“FAQs“). The press release clarified the details of the FX payment ban on license and service agreements regarding software and hardware developed in Turkey.

What’s New?

The exceptions to the FX payment ban introduced by the Communiqué on the Decree No. 32 Regarding the Protection of the Value of the Turkish Currency (“Communiqué“) included license and service agreements regarding software and hardware. As per Article 8 of the Communiqué, within the scope of information technologies, payments for services agreed to in sales agreements regarding software developed outside of Turkey and license and service agreements regarding software and hardware are exempt from FX payment ban. There was uncertainty as to whether the condition of being “developed outside of Turkey” for the software and hardware was also required for the payment of the “license and service agreements regarding software and hardware”.

The Ministry clarified the Communiqué and stated that the license and service agreements regarding software and hardware developed in Turkey are not exempt from the FX payment ban; therefore, the payment for services agreed to in these agreements cannot be denominated in foreign currencies or indexed to foreign currencies. (The FAQs are available here in Turkish)
Conclusion

As per the Ministry’s press release, the payment for services stipulated under the license and service agreements executed between Turkish residents regarding software and hardware developed in Turkey cannot be denominated in foreign currencies or indexed to foreign currencies. The Ministry’s answers to the FAQs clarified uncertainties regarding this subject. Companies should consider this ban and its exemptions when executing license and service agreements regarding software and hardware.