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New Era in Foreign Exchange (“FX”) Payment Ban: Exceptions for Foreign Trade Contracts!


Cenk Civan

Ezgi Saba Varol

The Communiqué No. 32/34 on the Decree No. 32 on the Protection of the Value of the Turkish Currency (“Communiqué”) is amended by the Ministry of Treasury and Finance (“Ministry”) through the Official Gazette dated February 28, 2024, and numbered 32474, regarding the new FX payment exceptions for movable sales contracts. Prior to the amendment to the Communiqué, movable sales contracts (except vehicle sales contracts) to be executed between residents in Türkiye could be fulfilled denominated in FX or indexed to FX, whereas payments in these contracts must be paid in Turkish Lira. With the amendment, payment in FX is now allowed for certain contracts.


Exceptions For Payment in FX

Under the Communiqué, contracts that can be paid in FX are as follows:


  • Negotiable instruments which were denominated in FX and issued before April 19, 2022, for the purpose of fulfilling payments for movable sales contracts (except vehicle sales contracts) executed before April 19, 2022, can be paid in FX;

  • Invoices issued before the date April 19, 2022, can be paid in FX;

  • Transactions which are denominated in FX on Borsa İstanbul A.Ş.’s Precious Metals and Precious Stones Market, as well as settlements of such transactions, can be paid in FX;

  • Movable sales contracts pertaining to exports which are conducted through international trading companies or sectoral foreign trade companies under an intermediated export contract, as well as export consortium and e-export consortium under an intermediated export contract, can be paid in FX;

  • Movable sales contracts for the delivery of goods which are subject to the transit and customs warehouse regimes set forth in the Customs Law No. 4458, including the sale and delivery of bunker fuel (ihrakiye) and to temporary storage and free zone regulations can be paid in FX;

  • Movable sales contracts executed by companies operating in free zones and movable sales transactions regarding the delivery of goods for exports can be paid in FX.


The first three exceptions mentioned above became effective as of April 21, 2022, while the remaining exceptions became effective as of February 28, 2024.


Conclusion

The Ministry published a press release on February 29, 2024, providing that these amendments aim to address the issues arising from Turkish Lira payment requirement regarding movable sales contracts, in response to intense demand from various sectors. In particular, we understand that partial amnesty was provided for trading companies since certain exceptions were introduced retroactively. With the current exceptions introduced for foreign trade transactions, we believe that the practice problems in the sector will be resolved, providing significant advantage for trading companies.

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