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Legal Alerts

FX Payment Ban Clarified

Legal Alerts
Banking & Finance
Financial Institutions

Recent Development

An amendment was published in the Official Gazette on April 19, 2022 altering the Communiqué No. 2008-32/34 on the Decree No. 32 on the Protection of the Value of the Turkish Currency (“Communiqué“). Pursuant to the amendment, it is no longer possible to pay in foreign currency the purchase price of the sale of goods between parties that are resident in Turkey, even when the purchase price is denominated in a foreign currency or indexed to a foreign currency in the sale contract. The amendment entered into force on the same date of publication in the Official Gazette. The Ministry of Treasury and Finance (“Ministry“) clarified the implementation principles of the ban with its announcement dated April 21, 2022.

Implementation Principles

The Ministry clarified the following points:

  • Payment obligations regarding negotiable instruments indexed to a foreign currency (e.g. checks) issued within the scope of contracts concluded before April 19, 2022 may be fulfilled in a foreign currency.
  • Payment obligations regarding invoices issued before April 19, 2022 may be fulfilled in a foreign currency.
  • Purchase and sale transactions regarding precious metals and precious stones carried out in a foreign currency and payment obligations within the scope of settlement of such transactions in the Precious Metals and Precious Stones Market of Borsa İstanbul A.Ş., may be fulfilled in a foreign currency.

In addition to the above clarifications, the Ministry highlighted the following principles:

  • The phrase “movable” in the Communiqué will cover all kinds of goods that do not fall within the definition of immovable asset.
  • Payment obligations regarding movable sales contracts concluded/to be concluded between Turkish residents and non-residents can be fulfilled in a foreign currency.
  • Payment instruments such as checks, bills of exchanges, etc. issued in a foreign currency on or after April 19, 2022 cannot be used to fulfill the payment obligations of the movable sales contracts concluded/to be executed among Turkish residents.
  • The amendment will not change the current status of vehicle sales contracts. Therefore, determining the contract price and other payment obligations arising out of these contracts in a foreign currency or indexed to a foreign currency concluded between Turkish residents continues being prohibited.
  • Contracts made regarding the transactions carried out within the scope of the Law No. 4749 on Regulating Public Finance and Debt Management will not be subject to the FX payment ban on the sale of goods.
  • It will be possible to create, issue, buy and sell capital market instruments, including foreign capital market instruments, depositary receipts and foreign investment fund shares and to decide on the liabilities regarding the transactions, in a foreign currency.

The FX payment bans in the Communiqué on other contract types remain in effect.