Communiqué No. 2022-32/66 Amending Communiqué No. 32 on the Protection of the Value of Turkish Currency (“Communiqué”) was published in the Official Gazette on 19 April 2022 and numbered 31814. The Amendment Communiqué entered into force on the date of its publication.

What does the Amendment Communiqué change?

According to Article 8 of Communiqué No. 32 on the Protection of the Value of the Turkish Currency, residents in Turkey can decide their payment obligations in foreign currency or indexed to foreign currency when it comes to their movable sales contracts entered among themselves, excluding vehicle sales contracts. As a result of the provision added to the 9th paragraph of the 8th article of Communiqué No. 2008-32/34 with Communiqué No. 2022-32/66 published in the Official Gazette on 19 April 2022, it is now mandatory to settle the payment obligations for movable sales contracts (all manner of movable goods, including commercial goods) entered into between residents in Turkey in Turkish currency.

In other words, except for vehicle sale contracts, persons residing in Turkey may still decide the payment obligations in foreign currency or indexed to foreign currency under movable sales contracts entered into between themselves, but payments under those contracts must be settled and accepted in Turkish lira.

There is no provision in the Communiqué on the exchange rate to be used after the amendments made regarding movable sale contracts. On the other hand, the view held here is that the exchange rate to be taken as a basis for conversion into Turkish lira is to be defined by the parties first, and where this is not possible the effective selling rate of the Turkish Central Bank on the date of the payment obligation can be taken as a basis.

Moreover, the Communiqué does not contain any restrictions on what conditions the contracts must meet in terms of their form. The establishment of a contract is therefore subject to the general provisions of the Turkish Code of Obligations, and this obligation also applies to oral contracts.

Press Bulletin of the Ministry

Upon entry into force of Communiqué No. 2022-32/66 in a press bulletin released on 21 April 2022, the Ministry of Treasury and Finance pointed out that the term "movable" as used in the Amendment refers to all goods and assets not covered by the scope of the definition of "immovables". The Press Bulletin states that residents of Turkey are not required to make or accept payment obligations in Turkish lira as long as such obligations arise from movable sale contracts entered into before 19 April 2022 and such obligations fall within the scope of negotiable instruments in foreign currency prior to 19 April 2022. In addition, there is no obligation to fulfill or accept payment obligations in Turkish lira as long as these obligations arise from invoices issued before 19 April 2022.

Administrative fines

In contracts that fail to comply with the prohibition of foreign currency transactions, administrative fines of between 14,200 TL and 118,500 TL would be imposed separately for each party as of 2022. In the event of failing to comply with the ban for the second time, the double amount of these fines will be imposed.