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Legal Alerts

New Exemptions to FX Payment Ban

Legal Alerts
Banking & Finance

Recent Development

The Ministry of Treasury and Economy amended the FX payment ban exemptions. The amendments were published in the Official Gazette dated November 16, 2018.

What’s New?

In addition to the exemptions provided under the communiqué dated October 6, 2018, the following agreements will be exempted from the FX payment ban:

  • Agreements regarding the sale and lease of real estate (i) where one of the parties is not a Turkish citizen; or (ii)  executed by (a) non-Turkish residents’ Turkish branches, representative offices, or liaison offices; (b) companies in which a non-resident person directly or indirectly holds (x) 50% or more of the share capital or (y) management control solely or jointly; and (c) free zone companies (all together, the “Exempted Persons“), provided that the Exempted Persons act as purchaser or lessee.
  • Employment and service agreements of the Exempted Persons where the Exempted Persons are employers or service receivers.
  • Service agreements whose execution begin in Turkey and end abroad, or vice versa; or begins and ends abroad.
  • Construction agreements whereby the contractor assumes FX costs.
  • Lease and sale agreements of engineering vehicles.
  • Agreements executed by (a) constructors or appointed companies or (b) third parties institutions in which these constructors or appointed companies entered into agreements or (c) the parties in which these third parties entered into agreements and any other agreements made for the performance of FX denominated or FX indexed agreements, and tenders of public institutions and international treaties (except agreements regarding the sale of real estate and employment agreements).
  • Management/lease agreements regarding tourism facilities certified by the Ministry of Culture and Tourism.
  • Lease agreements in respect of duty-free stores.
  • Agreements made concerning transactions in accordance with the Law on Public Finance and Debt Management No. 4749.
  • Employment agreements of sailors.

Other Clarifications

  • The period for the conversion of FX denominated payments into TRY payments was not extended.
  • If the relevant agreement is performed abroad, Turkish residents’ branches, representative offices, liaison offices, bureaus and funds that they operate or manage, and non-resident companies of which Turkish residents hold 50% or more of the share capital directly or indirectly will not be considered resident in Turkey and therefore, will not be subject to the FX payment ban.
  • Financial leasing agreements and agreements regarding the sale of commercial vehicles for passenger transportation made prior to September 13, 2018 do not need to be converted.
  • Parties to an agreement will no longer be required to convert the agreement prices into TRY in cases where the parties to the agreement cannot benefit from an exemption and the exempted party is not willing to benefit from the exemption.
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