1. Overview

The amendments to the Communiqué No. 2008-32/34 on the Decree No. 32 on the Protection of the Value of Turkish Currency (the “Communiqué”) were published and entered into force on February 28, 2024. These amendments allow for the relaxation of restrictions on payments in foreign currency between persons domiciled in Turkey. Specifically, exceptions to the prohibition on making payments in foreign currency under chattel sales agreements have been introduced.

The amendments specify the conditions under which obligations under chattel sales agreements between persons domiciled in Turkey may be fulfilled in foreign currency. Under the previous regulations, only payments in foreign currency for vehicle sales agreements were permitted. However, following the amendment dated April 19, 2022, payments in foreign currency were prohibited for chattel sales agreements as well. The recent amendment, however, provides for specific exceptions where payments in foreign currency are now allowed.

2. Exceptions Introduced by the Amendment

The exceptions permitting foreign currency payments are as follows:

• (a) Payment obligations related to negotiable instruments issued in foreign currency under chattel sales agreements executed before April 19, 2022.
• (b) Payment obligations related to invoices issued before April 19, 2022.
• (c) Payment obligations arising from foreign currency-denominated transactions executed on the Borsa İstanbul Precious Metals and Diamond Markets and their corresponding settlements.
• (d) Payment obligations arising from exports conducted through Foreign Trade Capital Companies or Sectoral Foreign Trade Companies.
• (e) Payment obligations associated with the delivery of goods subject to customs declarations.
• (f) Payment obligations arising from chattel sales agreements executed within free zones under international trade transactions.

The exceptions listed in paragraphs (a), (b), and (c) are effective as of April 21, 2022. Those in paragraphs (d), (e), and (f) became effective as of February 28, 2024.

3. Implications of the Amendment

This amendment allows for the use of foreign currency in certain chattel sales agreements executed between persons domiciled in Turkey. The provision for foreign currency payments, particularly in the context of international trade transactions and certain financial obligations, enables more flexibility in both domestic and international commerce.

By providing an alternative to Turkish lira payments in cases where restrictions apply, this amendment addresses some of the practical difficulties faced in trade and financial transactions. It is expected to promote trade expansion and facilitate operations for firms engaged in foreign currency transactions.

4. Conclusion

This amendment introduces exceptions to the prohibition on foreign currency payments, thereby allowing such payments under specific circumstances. The new regulation is anticipated to support the growth of trade and simplify operations in certain sectors, providing a significant advantage for businesses dealing in foreign currency transactions.