Turkey: Recent regulations related to Covid-19 Pandemic

The impact of Covid-19 is continuing to evolve in Turkey and businesses need to update their knowledge to keep up with the ever-changing regulations. For this purpose we provided a first report in our earlier newsletter concerning legal changes in Turkey relating to the pandemic. Our new update includes the recent shifts in legislation after our last report and other legal developments.

As we showed in our first report, corporations were prohibited from distributing more than 25% of their profit generated in 2019. The period of limitation in question was initially in force until 30 September 2020.  By Presidential Decree No. 2948 published on 18 September 2020, the dividend distribution limitation period has now been extended by an additional three months, until 31 December 2020.

Referring back again to our earlier report, regular notice of termination of employment relationships were prohibited initially until 17 July 2020. Since then, the period of this prohibition has been extended three times. The last and third extension was given by Presidential Decree No. 2930 and the new date is currently set as 17 November 2020, but the President may – according to the new regulations – extend this “non-termination period” until 30 June 2021. 

The period of short time working allowances had already been extended two times by Presidential Decrees 2706 and 2810. Most recently, it was published in the Official Gazette of 31 August 2020 that the period in question has been extended once again by two additional months. In total there have been four months of extension and the beginning date differs depending on the date when companies applied for the short time working system. 

The deadline for registering for the Data Controllers’ Registry Information System (“VERBIS”) has also been extended to 30 September 2020 according to an announcement by the Turkish Data Protection Board (“Board”). VERBIS is an online system provided by the Board with which data controllers are required to register according to Article 6 of the Personal Data Protection Law No. 6698. Please see our related articles in our previous newsletters of July 2016, July 2018 and January 2020 for more information. 

The Turkish Competition Authority (“TCA”) had announced on 23 March 2020 that the price increases, which are potentially misusing the conditions of the pandemic, will be closely scrutinised by the Authority. According to the announcement it had been observed that there had been various excessive price increases in the food markets, especially for fresh fruits and vegetables.  It was also stated that maximum administrative monetary fines would be imposed on companies engaging in anti-competitive behaviour in the food market. Accordingly, the authority declared on 7 May 2020 that it had launched a comprehensive investigation into 29 companies, including major supermarket chains operating in the food and cleaning/hygiene products market. 

Turkey has also established the Unfair Price Assessment Board (“UPAB”) under Law No. 7244, which was promulgated in the Official Gazette dated 17 April 2020, which among other things will serve as a tool to rein in the exorbitant price increases exploiting the pandemic conditions. The TCA already had the mission of monitoring price increases, but its scrutiny was limited to the undertakings having a dominant position on the market. By contrast, the UPAB will have responsibility for looking into excessive pricing practices in relation to the retail market, irrespective of companies’ dominant position. Law No. 7244 has no clause specifying the UPAB’s operating term.

Turkey has given momentum to implementing an open banking system. The Turkish Banking Regulatory and Supervisory Authority (“BRSA”) issued the Regulation on Banks’ Information Systems and Electronic Banking Services on 14 March 2020, which entered into force on 1 July 2020. In the open banking system, financial data of clients can be obtained by financial technology companies at the client’s request. In this way, financial technology companies can offer appropriate strategies and products tailored to the client’s particular needs. Open Banking will also help meet demand for digital banking in the age of Covid-19.

With a presidential decree of 30 September 2020, the Banking and Insurance Transaction Tax (“BITT“) is decreased back to its original value of 0.2 percent (0.2%) from 1 percent (1%). The relevant rate had been temporarily increased with a presidential decree on 24 May 2020, to produce a fund to support those companies and citizens that were financially hit by the pandemic. Decreasing the rate back to its former value with the presidential decree on 30 September 2020, can be seen as a part of the normalization process after the first wave of COVID-19.  

In addition, the import and export of critical products for Covid-19 treatment, including but not limited to protective masks, liquid-proof aprons and sterile medical gloves, will require the approval of Turkish Medicines and Medical Devices Authority (“TİTCK”). This requirement was announced through the Approval Application Guidelines for the Import and Export of Certain Medical Devices Due to the Covid-19 Outbreak published by the TİTCK on 14 April 2020. The application for approvals must be made through the Electronic Application System.

Travel restrictions and lockdowns have crippled demand for tourism and the aviation industry in Turkey. To provide relief for these industries, expenditures of customers relating to domestic tourism can now be paid within a longer period. This development was introduced through an Amendment in the Regulation on the Principles and Rules of Retail Trade published in the Official Gazette on 18 June 2020. With this new modification, expenditures of customers to airlines, travel agents and accommodations in Turkey can be paid in 18-month instalment plans.

Dr Gökce Uzar Schüller
Frankfurt a.M. and Istanbul
Gülce Sepin, Trainee 
Frankfurt a.M. 

October 2020