ABSTRACT
Presidential Decision No. 85 dated 13.09.2018 introduced some restrictions on transactions conducted in foreign currency or indexed to a foreign currency between parties resident in Turkey. The new restrictions state that if the contracting parties are legal or natural persons resident in Turkey and if the contract is not included in the exceptions determined by the Ministry of Treasury and Finance (“the Ministry”), any costs and other payment obligations related to the contract cannot be in foreign currency or indexed to a foreign currency. The Ministry’s exceptions were issued on 16.11.2018 in a Communiqué (Communiqué No: 2018-32/52) Amending the Communiqué on Decision No. 32 on the Protection of the Value of Turkish Currency (Communiqué No: 2008-32/34) (“Communiqué”). This article aims to explain the scope and exceptions of the prohibition on concluding contracts in or indexed to foreign currency. Also, it contains information on the types of contracts that can and cannot be concluded in foreign currency or indexed to a foreign currency.
I. INTRODUCTION
Decision No. 32 on the Protection of the Value of Turkish Currency (“Decision No. 32”), regulated in accordance with Law No.1567 and published in the Official Gazette No. 20249 dated 11.08.1989, has been amended through the “Resolution of the President No. 85 on the Amendment to Decision No. 32 on the Protection of the Value of Turkish Currency” published in the Official Gazette No. 30534 dated 13.09.2018. The amendment was made by adding subparagraph (g) to Article 4 of Decision No. 32. The amendment states; “Turkish residents, unless otherwise indicated by the Ministry, shall not determine contract value and other additional contractual payments in foreign currency or indexed foreign currency stipulated in agreements of purchase and sale of any kind of movable and immovable properties, leasing of any kind of movable and immovable properties, including transport leasing and financial leasing, leasing business, labour, service and construction.” Provisional Article 8 was added to the same decision as; “Within thirty days after the entry into force of Article 4 (g) of this decision, the prices specified in the aforementioned paragraph and determined in foreign currency in the contracts concluded in the previous period shall be determined by the parties as Turkish Lira except in cases determined by the Ministry.” These provisions entered into force on 13.10.2018 following the publication of Presidential Resolution No. 85 and will be executed by the Ministry. Accordingly, by way of issuing the Communiqué (Communiqué No: 2018-32/51) Amending the Communiqué on Decision No. 32 on the Protection of the Value of Turkish Currency (Communiqué No: 2008-32/34) on 06.10.2018, the Ministry aims to clarify the issues regarding Decision No. 32. The types of contracts that can be concluded in foreign currency or indexed to a foreign currency are specifically determined in the Communique. The Communiqué was published on 16.11.2018 by the Ministry and included a number of changes1 to the Communiqué published on 06.10.2018 and some new provisions.
This article examines in detail the types of contracts determined in the Communique that can or cannot be concluded in foreign currency or indexed to a foreign currency
II. THE SCOPE OF THE COMMUNIQUÉ
A. The Notion of Residents in Turkey
The decision applies prohibitions on residents in Turkey. The notion of residents in Turkey is defined in Article 2 Paragraph (b) of Decision No. 32 as “natural and legal persons who place legal settlements in Turkey including workers, independent business owners and self-employed Turkish citizens abroad.”
In addition, persons who were not listed in Decision No. 32 have been added in Article 8, Paragraph 23 of the Communiqué; “the branches, agencies, offices, liaison offices, their funds managed and operated by them or companies participated directly or indirectly by persons residing abroad, with a minimum shareholding of fifty percent of residents in Turkey that takes place abroad shall be considered as resident in Turkey within the scope of application of Article 4 (g) of Decision No. 32.” Thus, in this way, residents in Turkey are prevented from concluding prohibited contracts by setting up companies or through their representatives abroad2. In the same Paragraph the Communiqué states: “However, this paragraph shall not apply if the contract is carried out abroad”, thus ensuring that Paragraph 23 does not apply to contracts concluded among those recognized as residents in Turkey
B. Types of Contracts and Other Payment Obligations that Can Not be Concluded in Foreign Currency or Indexed to a Foreign Currency
1. Real Estate Sales Contracts
Under Paragraph 1 of Article 8, relating to “Real Estate Sales Contracts”, residents in Turkey, among themselves, shall not determine the contract price and other payment obligations arising from contracts in foreign currency or indexed to a foreign currency in contracts covering real estate in Turkey, including residential and roofed workplaces. In other words, in regard to Real Estate Sales Contracts, including the sale of houses, residences, domains, land, cropland and offices, residents in Turkey must state the contract price and other payment obligations (penalty clauses, side payments, default interest, etc.) arising from the contract in Turkish Lira (“TL”). In addition, pursuant to Paragraphs 15 and 16 of the same Article within the scope of the projects, which state institutions and organizations are party to, that will be realized within the scope of the tenders, contracts and international agreements executed in foreign currency or foreign currency indexed; it is not possible to determine the prices in foreign currency or foreign currency indexed related to the Real Estate Sales Contracts which will be concluded with third parties by the contractors or the commissioning companies and their contracting parties or the Real Estate Sales Contracts to be concluded within the framework of the mentioned projects and the Real Estate Sales Contracts to be concluded with third parties by Turkish Armed Forces Strengthening Foundation3 and its companies.
In addition, as specified in Paragraph 20, commercial airline businesses conducting passenger, cargo and mail transport activities, companies providing technical care services for airline transport vehicles and their motors, parts and components, public or private entities authorized or licensed to render ground services at airports as well as entities established or participated with a minimum shareholding of fifty percent by the foregoing that reside in Turkey shall not conclude Real Estate Sale Contracts in foreign currency or indexed to a foreign currency.
There are some exceptions to this Communiqué where it is possible for Real Estate Sales Contracts to be in foreign currency or indexed to a foreign currency. Paragraph 3 of Article 8 gives residents in Turkey who are not citizens of the Republic of Turkey or, as referred in in Paragraph 194 of Article 8, persons who are party as buyer or tenant to a Real Estate Sales Contract may decide on the contract price and other payment obligations regarding the contract in foreign currency or indexed to a foreign currency. The important thing here is, even if the persons who conclude the contract are residents in Turkey, they must not be Turkish citizens or they shall be non-residents as per Paragraph 19. In other words, Turkish citizens who are also resident in Turkey may not conclude Real Estate Sale Contracts in foreign currency or indexed to a foreign currency under any circumstances
2. Real Estate Lease Contracts
Another type of contract that is included in the scope of the prohibition on contracting in foreign currency is Real Estate Leasing Contracts. Paragraph 2 of Article 8 states: “The contract prices and other contractual financial obligations in Real Estate Leasing Contracts for immovables located in Turkey including residences and roofed workplaces executed between Turkish residents cannot be determined in foreign currency or be indexed to a foreign currency.” In other words, in regard to Real Estate Leasing Contracts including the sale of houses, residences, domains, land, cropland and offices, residents in Turkey must determine the contract price and other payment obligations (penalty clauses, side payments, default interest, etc.) arising from the contract in TL.
In addition, Paragraph 15 of Article 8 states that Real Estate Leasing Contracts concluded by state institutions, organizations and Turkish Armed Forces Strengthening Foundation including its commissioning companies and their contracting parties as third parties may not be determined in foreign currency or indexed to a foreign currency.
Additionally, as also specified in paragraph 20, commercial airline businesses conducting passenger, cargo and mail transport activities, companies providing technical care services for airline transport vehicles and their motors, parts and components, public or private entities authorized or licensed to render ground services at airports as well as entities established or participated with a minimum shareholding of fifty percent by the foregoing that reside in Turkey must not conclude Real Estate Leasing Contracts in foreign currency or indexed to a foreign currency. However, it is possible in exceptional circumstances to decide on Real Estate Leasing Contracts in foreign currency or indexed to a foreign currency. These exceptions are included in Paragraphs 3, 4 and 5 of the Article and are as follows: “(3)
The contract prices and other contractual financial obligations in rental and sales agreements for immovables executed by a nonresident Turkish citizen person resident in Turkey or parties referred to in paragraph nineteen of this Article who acts as the purchaser or the tenant under such contracts can be determined in a foreign currency or be indexed to a foreign currency. (4) The contract prices and other financial obligations arising from contracts for rental of accommodation facilities where such facilities are licensed by the Ministry of Culture and Tourism can be determined in a foreign currency or be indexed to a foreign currency.
(5) The contract prices and other financial obligations arising from contracts for rental of duty-free shops can be determined in a foreign currency or be indexed to a foreign currency.”
These requirements are clearly related to persons who have no citizenship relation as determined in real estate sales contracts and contracts to be signed regarding the leasing of touristic and cultural accommodation and duty-free shops, which should be determined in foreign currency by nature. It should not be disregarded that the exceptions are determined as those decided in terms of foreign currency.
3. Employment Contracts
Employment contracts are regulated under Labor Law No. 4857 and defined as contracts composed of a party (employee) who undertakes to perform work and the other party (employer) who undertakes to pay wages.5
Paragraph 6 of Article 8 states that contract prices and other contractual financial obligations arising from Employment Contracts other than those to be performed outside of Turkey between Turkish residents and to be performed with maritime workers cannot be concluded in a foreign currency or be indexed to a foreign currency.
In addition, Paragraph 15 of Article 8, states that the contract price and the other contractual financial obligations in Employment Contracts executed by and between contractors or official companies and third parties may not be determined in foreign currency or be indexed to a foreign currency where they fall within the scope of projects with public tenders, agreements and international treaties.
Additionally, as indicated in Paragraph 20, commercial airline businesses conducting passenger, cargo and mail transport activities, companies providing technical care services for airline transport vehicles and their motors, parts and components, public or private entities authorized or licensed to render ground services at airports as well as entities established or participated with a minimum shareholding of fifty percent by the foregoing that reside in Turkey must not conclude Employment Contracts in foreign currency or be indexed to a foreign currency.
However, in exceptional circumstances, it is possible to decide on foreign currency or be a indexed to a foreign currency in Employment Contracts. These exceptions are laid out in Paragraph 14 of Article 8 of the Communique. Firstly, the contract price and other contractual financial obligations in Employment Contracts executed by individuals who are not Turkish citizen but who are Turkish residents (Turkish non-citizen residents) can be determined in a foreign currency or indexed to a foreign currency. The important thing here is that, as with the other exceptions, even if the persons who will conclude the contracts are residents in Turkey, they should not be Turkish citizens, they should be non-residents. Another exception stated in Paragraph 19 is Employment Contracts executed by branches, representatives, offices, and liaison offices of real or legal entities that do not reside in Turkey or companies in which they directly or indirectly hold 50% or more of the shares or the companies that they have a common control and/or over and free zone companies under their operations in free zones in cases where such entities act as employer or service-receiver. These may be determined in foreign currency or indexed to a foreign currency.
4. Service Contracts
Another type of contract within the scope of the Communiqué is Service Contracts. This type of contract is regulated in the Turkish Code of Obligations6 (“TCO”), Articles 470 to 486. Accordingly, a service contract is defined as a contract in which the worker is dependent on the employer for work for a specified or non-specified period of time, and the employer undertakes to pay him/her the time or the work done in return, for example, attorney agreements, carriage agreements, consulting contracts, brokerage contracts.
Paragraph 7 of the Article states that contract prices and other contractual financial obligations in Service Contracts executed by Turkish residents cannot be determined in foreign currency or be indexed to a foreign currency, including consulting, carriage and brokerage agreements, except in some service contracts.
As stated above, in some exceptional cases it is possible to determine the contract price and other payment obligations in foreign currency or indexed to a foreign currency. These exceptional cases will be discussed below under the heading “Types of Contracts That Can Be Concluded in Foreign Currency or Indexed to a Foreign Currency”.
5. Negotiable Instruments
Paragraph 21 of the Article states that the value of securities issued within the scope of the agreements that cannot be determined in foreign currency or indexed to a foreign currency referred to above may not be determined in foreign currency or indexed to a foreign currency. However, negotiable instruments arranged and entered into circulation before the date of entry into force of Provisional Article 8 of Decision No. 32 are exempt from the provisions of the Article.
C. Types of contracts not covered by the prohibition specified in Decision no. 32
1. Movable Sales Contracts
Movable Sales Contracts are regulated in Paragraph 9 of Article 8 of the Communiqué. The Paragraph states that contract prices and other contractual financial obligations arising from sales contracts between Turkish residents for movables other than vehicles may possibly be determined in a foreign currency or indexed to a foreign currency.
In other words, contracts regarding the sale of movables (related to all kinds of goods and products such as machinery, instruments, electronic devices, etc.) may be determined in foreign currency or indexed to a foreign currency. But in all vehicle sales contracts, the contract price and other obligations of payment in regard to the vehicle sales contract must be determined in TL.
2. Movable Leasing Contracts
Movable Leasing Contracts are regulated in Paragraph 10 of Article 8 of the Communiqué. The Paragraph states that contract prices and other contractual financial obligations arising from leasing contracts between Turkish residents for movables other than vehicles may possibly be determined in a foreign currency or indexed to a foreign currency.
In other words, contracts regarding the lease of movables (related to all kinds of goods and products such as machinery, instruments, electronic devices, etc.) may be determined in foreign currency or indexed to a foreign currency. However, in all vehicle leasing contracts, the contract price and other obligations of payment in regard to vehicle leasing contract must be determined in TL
3. Performance/Construction Contracts
Performance/Construction contracts are regulated in Articles 470 to 486 of the TCO and defined as such contracts where the contractor undertakes to create a work or perform a task and the party who orders the work or task undertakes to pay a consideration in return. In the Law of Intellectual Property Rights No. 5846, the notion of work is defined as any intellectual or artistic product bearing the characteristic of its author that is deemed a scientific, literary or musical work or work of fine art or cinematography.
As indicated in Paragraph 8 of Article 8, performance/construction contracts containing costs indexed to a foreign currency among residents in Turkey can be concluded in foreign currency or indexed to a foreign currency. Here it is essential that those contracts include costs indexed to a foreign currency. In other words, it is a requirement that the contract price and other payment obligations are determined in Turkish Lira in performance/construction contracts that do not contain costs indexed to a foreign currency.
4. Leasing Contracts
Leasing contracts are regulated in Paragraphs 12 and 13 of Article 8 of the Communiqué. Paragraph 12 states that contract prices and other contractual financial obligations arising from financial leasing contracts for vessels under Turkish International Ship Registry Law No. 4490 and Law on Amending Statutory Decree No. 491 can be determined in a foreign currency or indexed to a foreign currency. Paragraph 13 states that contract price for financial leasing contracts that fall under the scope of Articles 17 and 17(A) of Decision No. 32 can be determined in a foreign currency.
5. Service Contracts
Although Paragraph 7 of Article 8 states that the contract price and the other payment obligations arising from contracts cannot be determined in terms of foreign currency or indexed to a foreign exchange in principle, the Ministry does allow exceptions, which are included in Paragraph 7. These are:
“a) Service agreements to be executed by persons who are not Turkish citizens, b) Service agreements that are concluded for exports, transit trades, sales and deliveries that are deemed as exports, and services and activities that bring foreign currencies into Turkey, c) service agreements executed within the scope of activities to be performed abroad by Turkish residents, ç) service agreements between Turkish residents starting from Turkey and ending abroad or starting abroad and ending in Turkey or starting abroad and ending abroad.” Paragraph 11 of Article 8 states that contract prices and other contractual financial obligations arising from sales agreements for software and hardware produced abroad and service contracts for hardware and software produced abroad as part of information technology can be determined in a foreign currency or indexed to a foreign currency.
Another regulation in regard to service contracts is in Paragraph 22 of the same Article. Contracts indexed to precious metals where values are determined as foreign currency in international markets and/or indexed to commodity and/or indexed to a foreign currency indirectly shall be considered as an agreement indexed to a foreign currency within the scope of subparagraph (g) of Article 4 of Decision No 32. However, it is possible to index fuel oil prices in service contracts for transportation services.
6. Miscellaneous Contract Types
The only provision regarding Software Contracts is in Article 8, Paragraph 11 of the Communiqué. This Paragraph states that contract prices and other contractual financial obligations arising from sales agreements for software and hardware produced abroad and service contracts for hardware and software produced abroad as part of information technology can be determined in a foreign currency or indexed to a foreign currency.
The regulations regarding contracts to which governmental institutions and organizations are parties is in Paragraphs 15 and 16 of Article 8. Paragraph 16 states that the contract price and other contractual financial obligations in contracts executed by and between contractors or official companies and third parties and to which government institutions and organi zations are party may be determined in foreign currency or as indexed to a foreign currency only within the scope of the execution of projects with public tenders, agreements and international treaties that are executed in foreign currency or as indexed to a foreign currency, excluding real estate sales contracts and employment contracts. Through this provision, contracts to which governmental institutions and organizations are parties may be determined in foreign currency or indexed to a foreign currency to a great extent. Paragraph 15 states that, without prejudice to the provisions of Paragraph 16, the contract price and the other contractual financial obligations in agreements other than real estate sales and immovable rental contracts executed by governmental institutions and organizations and Turkish Armed Forces Foundation may be determined in foreign currency or as indexed to a foreign currency. The contract price and the other contractual financial obligations arising from contracts executed under Law on Public Finance and Arrangement for Management of Debts No. 47497, may be determined in foreign currency or indexed to a foreign currency.
The contract price and the other contractual financial obligations arising from contracts executed by banks with respect to the abovementioned transactions may be determined in foreign currency or indexed to a foreign currency.
Capital Market related contracts are essentially excluded from the prohibition of contracts determined in foreign exchange. Paragraph 18 of Article 8 states that provided the provisions of Decision No. 32 are reserved, capital market instruments (including the foreign capital market instruments and depository receipts, and foreign investment fund shares) may be issued and/or traded in foreign currency or indexed to a foreign currency, or the obligations regarding such transactions may be determined in a foreign currency or indexed to a foreign currency within the framework of Capital Markets Law numbered 63628 and the secondary legislation with respect to the aforementioned law.
In aviation contracts, as regulated in Paragraph 20 of Article 8, the contract price and other contractual payment obligations in agreements executed by Turkish-resident commercial airline companies operating in the transportation of passengers, freight and mail, companies providing technical maintenance services to airplanes or for their motors and other components, public or private legal entities or institutions that operate on ground services in airports within the scope of civil aviation legislation, or companies and associations that directly or indirectly hold 50% or more of the shares may be determined in foreign currency or indexed to a foreign currency, excluding real estate sales and rental contracts and employment contracts.
Contracts concluded before the effective date of Article 8 of Decision No: 32 are included in paragraphs 24, 25 and 26 of Article 8 of the Communiqué. Paragraphs 24, 25 and 26 respectively state that contracts which are deemed exceptions in the scope of this Article and were executed prior to the effective date of provisional Article 8 of Decision No 32 are exempt from the abovementioned provisional Article; rental contracts for vehicles and contracts of sale of commercial vehicles for passenger transportation executed prior to the effective date of provisional Article 8 of Decision No. 32 on the Protection of the Value of Turkish Currency are exempt from the provisions of the aforementioned provisional Article; contracts for financial leasing of movables and immovables executed prior to the effective date of provisional Article 8 of Decision No. 32 are exempt from the provisional Article.
III. PRINCIPLES REGARDING THE DETERMINATION OF CONTRACTS IN THE TURKISH LIRA
A. General Determination
In Paragraph 27 of Article 8, it is required to re-determine the contract price and other contractual financial obligations in Turkish currency for contracts specifically indicated in this Communiqué. In compliance with the amendments to Decision No. 32 and as stated in Paragraph 28 of Article 8, in the event that the parties cannot mutually agree on the exchange rate to be applied to contract values or other contractual financial obligations, whether it should be in a foreign currency or indexed to a foreign currency must be determined by applying the monthly consumer price index rate (“CPI”) at the date of re-determination to the exchanged amount in Turkish currency calculated based on the indicative effective selling rate on January 2, 2018, which was announced by the Central Bank of the Turkish Republic. While the total CPI is not indicated in the Communiqué, the CPI rates, set monthly by the Turkish Statistical Institute (“TSI”), determined for each month are emphasized.
In the continuation of Paragraph 28, it is regulated that of those contracts in which the contract price and other payment obligations cannot be concluded in or indexed to a foreign currency, the receivables collected or delayed and deposits given within the scope of the immovable property lease contracts and the negotiable instruments circulated within the scope of the performance of the contracts are exempted.
B. Determination on Leasing Contracts of Residential and Roofed Workplaces
Within the scope of the Communiqué, a different execution principle has been adopted in terms of residential and roofed workplace lease contracts that were established before the date of September 13, 2018. Instead of converting these contracts into TL, a temporary translation method has been adopted. Paragraph 28 of Article 8 of the Communique states; “The contract price which is determined in foreign currency or as indexed to foreign currency regarding rental agreements of residential premises and roofed workplaces which are signed before the effective date of provisional Article 8 of Decision No. 32 on the Protection of the Value of Turkish Currency, shall be determined in Turkish currency for two (2) years period according to principles stipulated in first sub-paragraph of the Paragraph.”
Through this regulation, contracts will be returned to the foreign exchange automatically after two years following the conversion to TL in residential and roofed workplace lease agreements9. In other words, at the end of the two-year period, the foreign currency provisions in these contracts will be effective again. The rent at the end of the two-year period will be re-calculated in foreign currency and in accordance with the increase in the contract. In the light of all these explanations, the foreign currency provisions in the contracts are frozen for a period of two years and they will attain effect again at the end of two years.
In the case of existing contracts that were determined as foreign currency in residential and roofed workplace lease contracts for only two years, the conversion methods to TL are also different. In accordance with the regulation in the Communiqué, additional transactions will be made for each year in a two-year period. Namely; “However, in the event that the parties cannot mutually agree to determine the rental value according to the principles indicated hereinabove on the date of the determination to stay in effect for one (1) year period following the rent year the determination has been made, it is stipulated that the rental value shall be increased based on the monthly changing rates of the CPI that are determined by the Turkish Statistical Institute for each month from the date of determination until the end of such rental year. In the event that the parties cannot mutually agree to determine the rental amount in TRL regarding the upcoming rental year, the rental amount for the upcoming rental period shall be determined by increasing the previous rental amount on the basis of the monthly CPI rate and such rental amount shall be valid until the end of two (2) years period.”
C. Stamp Tax on Contracts to be Determined in Turkish Lira
The Ministry issued a circular titled Stamp Tax Circular No.2210 on November 22, 2018 (“Circular”), which will be applied in the conversion of contracts into TL from existing foreign currency. In the contracts required to be re-determined in TL in accordance with Decision no. 32, the process of the application of Stamp Tax is clarified in the Circular. With the publication of the Circular, it was also clarified in which cases the foreign exchange denominated contracts should be converted into TL.
Contracts containing certain funds in accordance with the Circular shall be subject to relative stamp tax, unless the provisions of the Stamp Duty Law11 or special laws include any exceptional provisions, and if the contracts containing certain funds are amended, the paper on the amendment shall be subject to stamp tax over the increased amount. Accordingly, no stamp tax will be required for the amendments to be made in contracts that carry the following conditions together and for papers issued for the re-determination of the foreign currency denominated contracts into TL within the scope of Decision No. 32. The conditions are as follows: • If there is no change in the clauses of the relevant agreement (e.g., an extension of time, change in party, addition of new business etc.) other than the clause regarding price, • If there is a reference made to the original agreement, • If the total amount of the agreement in Turkish Lira following the revision does not exceed the amount of the original agreement in foreign currency multiplied by the foreign currency selling rate determined by the Central Bank of the Republic of Turkey on the issuance date of the revised agreement.
In the course of the translation of the contract price to TL, if the term of the contract is extended by the same price for a period of one year, even if the price does not increase in the conversion of the contract to TL, due to the time extension, the stamp tax will be calculated by taking into account the new price and the extended period determined for the extended period. In the event that an amendment is made in the other provisions of the original contract or a completely new contract to replace this contract, this contract shall be subject to the relative stamp tax on the total amount incurred in accordance with the general provisions.
IV. DISCUSSIONS ON DECISION NO. 32 AND THE COMMUNIQUÉ
Decision No. 32 that aims to protect the value of Turkish Currency was brought into force by the Council of Ministers’ decision and published in the Official Gazette No. 20249 dated 11.08.1989. The authority of the Council of Ministers relating to Decision No. 32 is based on Article 1 of Law No. 1567 on the Protection of the Value of Turkish Currency12. Article 1 states: “The President of the Republic is entitled to take measures concerning the regulation and restriction of sales and purchases of foreign exchange, coins, shares and bonds and the export and import of them and of precious stones and of all kinds of assets and objects made of or containing these substances, of negotiable instruments and of any kind of instruments and documents liable to secure payment. The President of the Republic is also entitled to enact decrees regarding the protection of the value of Turkish Currency.”
With Article 8 of Statutory Decree No. 700 dated 02.07.2018, the phrase “Council of Ministers” was amended to “President of the Republic”. In other words, the President currently has the authority in accordance with Law No. 1567 on the Protection of the Value of Turkish Currency. Clearly this amendment is based on the change in the government system and the abolition of the Council of Ministers.
The Presidential Decisions and the Communiqués are general regulatory procedures and it is clear that when the place in the hierarchy of norms is taken into consideration, the said regulations are not equal to the laws13. They are listed below. Although the authorization to regulate the protection of the value of the Turkish Lira is derived from the Decision, the ordinary limit of such authorization is the limitations in other laws14. Due to the new regulations introduced in the Communiqué, it is possible to evaluate what limitations are exceeded in some laws. Namely, a contract is defined as a legal transaction executed in order to bear legal consequences with mutual and interdependent declarations of the intention of two or more persons. As it is explicitly set out in the Constitution and the TCO, anyone who has the capacity to bear rights and to act may enter into any contract in a way that does not constitute a violation of the mandatory provisions of the law. Accordingly, while it is stated in Article 48 of the Constitution entitled “Freedom to Labor and Contract” that everyone has the freedom to work and contract in the field of their choice, it is indicated in Article 26 of the TCC entitled “Freedom of Contract” that parties may freely determine the content of a contract within the limits prescribed in law. Freedom of contract is an economic right. Regarding this right, individuals have the freedom to enter into contracts in the fields they wish with any person. However, as explicitly indicated in Article 26 of the TCO, freedom of contract can only be restricted within the framework provided by law. Article 13 of the Constitution explains how these fundamental rights and freedoms can be limited. Fundamental rights and freedoms can only be restricted by law, depending on the reasons set forth in the relevant articles of the Constitution without prejudice to their essence. Therefore, some arguments suggest that the prohibition of a contract with foreign exchange that results in a limitation of the freedom to contract should be executed by law rather than the decision of the President. In line with this, it is also claimed that subparagraph (g) of Article 4, which is incorporated into Decision No. 32 through the agency of “Resolution of the President No. 85 dated 13.09.201816.
V. CONCLUSION
In this article, the types of contracts that cannot be concluded in foreign currency or indexed to a foreign currency are explained and questions regarding conversion into TL, the duration and stamp duty are answered. In summary, residents in Turkey must determine a contract price and other payment obligations arising from a contract in TL in regard to real estate sales and leasing contracts. Furthermore, excluding the exceptions, a contract price and other payment obligations in labor and service contracts must not be determined in foreign currency or indexed to a foreign currency but must be determined in TL. It is possible to determine a contract price and other payment obligations in foreign currency or indexed to a foreign currency in movable leasing and sales contracts, performance/construction contracts and leasing contracts.
BIBLIOGRAPHY
TURGUT TAN, İdare Hukuku, 6. Edition, Turhan Book Store, Ankara 2017.
FATMA DIDEM SEVGILI GENÇAY, Adsız Düzenleyici İşlemlerin Normlar Hiyerarşisindeki Yeri, Ankara University Faculty of Law Journal, Ankara 2014.
ERDOĞAN TEZIÇ, Anayasa Hukuku, 15th Edition, Beta Publishing House, Ankara 2012.
KEMAL GÖZLER, İnsan Hakları Hukukuna Giriş, 1st Edition, Ekin Publishing House, Bursa 2017.
ZEKERIYA KÜRŞAT, 1567 sayılı Türk Parası Kıymetini Koruma Kanunu Hakkında 32 sayılı Kararda Değişiklik Yapılmasına Dair Karar ve Uygulaması Hakkında Tebliğ Hakkında Değerlendirme (Unpublished.).
LEVENT GÖNENÇ, Dövizle Sözleşme Yasağı, Türkiye Ekonomi Politikaları Araştırma Vakfı, https://www.tepav.org. tr/upload/files/1537907249-6.Dovizle_Sozlesme_Yasagi. pdf ( Access Date: 19 February 2019).
“85 sayılı Cumhurbaşkanı Kararına göre Türk parasına uyarlanacak sözleşmelere ilişkin damga vergisi uygulaması hakkında” http://www.gib.gov.tr/node/132647 (Access Date: 17 December 2018).
FOOTNOTE
1 The “provisional” Article 8 titled “Contracts in Foreign Currency and Foreign Currency Indexed” in the Communiqué dated 06.10.2018, was amended in the Communiqué published in 16.11.2018 as only Article 8. Accordingly, the characteristics of provisional and the title were excluded from the scope of the Communiqué.
2 Zekeriya KÜRŞAT, “1567 sayılı Türk Parası Kıymetini Koruma Kanunu Hakkında 32 sayılı Kararda Değişiklik Yapılmasına Dair Karar ve Uygulaması Hakkında Tebliğ Hakkında Değerlendirme”, p.11.
3 Turkish Armed Forces Foundation companies shall mean; the companies, which was established to strengthen the Turkish Armed Forces and more than half of its capital belong to the Turkish Armed Forces Foundation such as ASELSAN, HAVELSAN, ROKETSAN, TUSAŞ, İŞBİR, ASPİLSAN. https://hazine.gov.tr/File/Index- ?id=cd32ef43-d5ee-45d3-a6fed3127a5a4632
4 Paragraph 19 of Article 8: “The contract price and the other contractual financial obligations in the employment and service agreements executed by branches, representatives, offices, and liaison offices of the real or legal entities that do not reside in Turkey or companies in which they directly or indirectly hold 50% or more of the shares or the companies that they have a common control and/ or over and free zone companies under their operations in free zones in cases where such entities act as employer or service-receiver, may be determined in foreign currency or as indexed to foreign currency.”
5 Dated 10 June 2003, Official Gazette No. 25134.
6 Dated 4 February 2011, Official Gazette No. 27836.
7 Dated 9 April 2002, Official Gazzette No. 24721.
8 Dated 30 December 2012, Official Gazzette No. 28513.
9 Zekeriya KÜRŞAT, “1567 sayılı Türk Parası Kıymetini Koruma Kanunu Hakkında 32 sayılı Kararda Değişiklik Yapılmasına Dair Karar ve Uygulaması Hakkında Tebliğ Hakkında Değerlendirme”, p.14.
10 http://www.gib.gov.tr/ node/132647 (Date of Access, 17 December 2018).
11 Dated 11 July 1964, Official Gazette No.11751.
12 Dated 25 February 1930, Official Gazette No. 1433.
13 Turgut Tan, İdare Hukuku, 6. Edition, Turhan Bookstore, Ankara 2017, p.86.; Fatma Didem Sevgili Gençay, Adsız Düzenleyici İşlemlerin Normlar Hiyerarşisindeki Yeri, Ankara University Faculty of Law Journal, Ankara 2014/2, p.413.
14 Turgut Tan, p. 83.; Erdoğan Teziç, Anayasa Hukuku, 15. Edition, Beta Publishing House, Ankara 2012, p.77.
15 Kemal Gözler, İnsan Hakları Hukukuna Giriş, 1. Edition, Ekin Publishing House, Bursa 2017, p.302.
16 Levent Gönenç, Dövizle Sözleşme Yasağı, Türkiye Ekonomi Politikaları Araştırma Vakfı, https://www.tepav.org.tr/upload/files/1537907249-6. Dovizle_Sozlesme_Yasagi.pdf (Date of Access; 19 February 2019).
