On November 22, 2018, the Revenue Administration published the Stamp Tax Circular No. 22 (“Circular”) on its official website which clarifies the stamp tax application of the agreements to be converted into Turkish Lira within the scope of the Presidential Decree No. 85 published in the Official Gazette on September 13, 2018.
What Does the Circular Say?
According to the Stamp Tax Law, agreements that contain a certain monetary value are subject to stamp tax, unless the Stamp Tax Law or other applicable laws provide an exemption. In cases where the agreements that contain a certain monetary value are amended, the papers drawn up for the price amendment trigger the levy of stamp tax on the difference.
(i) Cases where stamp tax will not apply
The papers drawn up for converting the contract prices, which were previously determined in foreign currency, to Turkish Lira within the scope of the Presidential Decree No. 85 will not be subject to stamp tax if the following conditions are met collectively:
- The amendment should exclusively relate to the payment obligations, without making any amendment on other provisions of the agreement (parties, extension, new work, etc.).
- The total contract price which will be converted to Turkish Lira after the amendment should not exceed the amount calculated by way of multiplying (i) the price in foreign currency specified under the original agreement and (ii) the current exchange rate published by the Central Bank of the Republic of Turkey on the date when the amendment is executed.
- The amendment should refer to the original agreement.
(ii) Cases where stamp tax will apply
If the paper drawn up for converting the payment obligations to Turkish Lira determines an amount exceeding the amount calculated based on the exchange rate published by the Central Bank of the Republic of Turkey on the date when the amendment is executed, without amending other provisions of the agreement, the difference will be subject to stamp tax provided that the stamp tax in the original agreement was not paid by the stamp duty ceiling.
If the stamp tax of the original agreement concluded in foreign currency was paid at the stamp duty ceiling (TRY 2,135,949.30 for 2018) and if the paper drawn up for the amendment meets the above conditions, the difference will not be subject to stamp tax.
If the paper drawn up for converting the contract price to Turkish Lira is executed as a new agreement or contains amendments other than the payment obligations which results in a new agreement, this paper will be subject to stamp tax within the scope of the general stamp tax rules.