Protecting the value of the Turkish currency has been a significant issue since the beginning of the history of the Republic of Türkiye, and chronologically, the measurements have been taken ever since the 1930s by enacting the Law on the Protection of the Value of the Turkish Currency, numbered 1567 and dated 25.02.1930 (“Currency Protection Law”). In the intervening period of almost 100 years, although the Currency Protection Law has been amended many times, it is still in effect and authorizes the President of the Republic of Turkey (“President”) to take the necessary measurements and precautions for protecting the value of the Turkish currency through the decisions and decrees that the President will take.
The mentioned measures and precautions within the scope of the protection of the value of the Turkish currency include transactions subject to the export regime in Türkiye, which are carried out by the Turkish residents, and in this regard, the rules regulated under Communiqué numbered 2018-32/48 on Decree No. 32 on the Protection of the Value of Turkish Currency (About Export Fees) (“Communique No. 2018-32/48”) shall apply for the export transactions in Türkiye.
Turkish residents are defined in Decree No. 32 on the Protection of the Value of Turkish Currency dated 11.08.1989 (“Decree No.32”) as “Real persons and legal entities who have a legal residence in Turkey, including those who are employed, self-employed or owners of independent business abroad.”
2. Applicable rules stipulated in the Communique No. 2018-32/48 regarding the export transaction to be held by the Turkish residents.
2.1. Repatriation Obligation
As a part of purpose of protecting the value of the Turkish currency, Article 3 of the Communique No. 2018-32/48 regulates the obligation for repatriation of the export revenues of the exporters located in Türkiye as follows:
“The revenues of the export transactions performed by the exporters located in Turkey shall be directly and without any delay transferred or brought to the bank that intermediates the export transaction directly following the payment of the importer. The period for bringing the revenues into the country shall not exceed 180 days from the date of actual export.”
Actual export is defined under Article 3 of the Export Regulation as “The closure date of the customs declaration.”
The bank that intermediates the export transaction (“Intermediary Bank”) is defined under the Article 3/1-c of Export Regulation dated 16.01.2020 (“Export Regulation”) as “The bank that mentioned under Part 28 of the customs declaration or the bank with which the exporter has an agreement for the closure of the export transaction by submitting a sample of the relevant customs declaration / information regarding the customs declaration.”
Therefore, the exporters located in Turkey are obliged to repatriate the revenues they generated from the export transactions without any delay and within 180 days starting from the actual export date of the transaction.
According to Article 4/4 of the Export Regulation, in case the due date of the payments regarding the export transaction exceeds 180 days from the actual export date, the export revenues shall be repatriated within 90 days from the due date of the payment.
2.2. Exemption in terms of the export value and cancellation of the export values that need to be repatriated.
Although the general rule for the repatriation states that the revenues generated from the export transactions shall be repatriated within 180 days from the date of the actual export, Article 28 of the Export Regulation enacts exemption of for the repatriation obligations in terms the amount of the customs declarations as follows:
A. In case the amount of the missing price is ≤ 15.000,00 USD, the bank should directly or the Tax Authority within the 90 days notification period should close the export account by cancellation. To illustrate; exemption A may be applicable in the following examples:
A.1. In case the value of the customs declaration is below or equal to 15.000,00 USD per each customs declaration, the obligation for repatriation is not applicable,
A.2. In case the absence price is below or equal to 15.000,00 USD (for instance the value of the customs declaration is 40.000,00 USD and the exporter has repatriated the 30.000,00 USD part of it, which results the missing price as 10.000,00 USD) the obligation for repatriation for the remaining part of the value is not applicable.
B. In case the amount of the missing price is above 15.000,00 USD but below 100.000,00 – USD, and not exceeding 10% of the customs declaration value, the bank should directly or the Tax Authority within 90 days notification period should close the export account by cancellation. To illustrate; exemption B may be applicable in the following example:
B.1. In case the value of the customs declaration is 180.000,00 USD, and the exporter has repatriated the 164.000,00 USD part of it (10% of 180.000,00 USD = 18.000,00 USD -between 15.000,00 USD and 100.000,00 USD and the missing amount 16.000,00 USD is not exceeding 10% of the value of the customs declaration (18.000,00 USD) the obligation for repatriation for the remaining 16.000,00 USD part of the export value is not applicable.
C. In case the amount of the missing price is below 200.000,00 USD, and not exceeding 10% of the customs declaration value, subject to the force majeure events and justified circumstances regulated under Article 9 of the Communique No. 2018-32/48, the Tax Authority should close the export account by cancellation.
It is important to underline that the exporters can benefit from one of the above-mentioned exemptions and the exemptions are not applicable simultaneously.
Additionally, according to Article 22 of the Export Regulation, the revenues generated from: (i) services export, (ii) transit trade, (iii) sales to the non-Turkish residents through special invoices, (iv) export transactions within the scope of micro export and free zone transaction form which does not exceed 5.000 USD or equivalent are exempted from the obligation of repatriation.
Special invoices are the invoices issued with VAT exemption in sales to foreigners (or Turkish citizens who certify that they reside in a foreign country).
Micro export is the exportation of the goods listed under Article 216 of Decree on Implementation of Certain Provisions of the Customs Code, numbered 2009/15481.
2.3. Export Revenue Acceptance Certificate.
Once the export revenues are duly repatriated by the exporters within the given 180 days, to be able to close and finalize the export transaction, the intermediary bank which intermediates the export transaction shall prepare an Export Revenue Acceptance Certificate (“IBKB”).
Article 23 of the Export Regulation regulates the closure of the export transactions as follows:
“Without prejudice to the periods mentioned in the fourth paragraph of Article 4 and the export dates and periods mentioned in Article 7 for special exports, in case the foreign exchange export revenues (including advance payment) is brought to the country within 180 days from the date of actual export and an IBKB is issued, the export account shall be closed at the intermediary bank.”
Therefore, to be able to finalize the export transaction: (i) the export revenues shall be repatriated within 180 days from the date of the actual export and (ii) the IBKB relevant to the export transaction shall be issued by the bank intermediated the export transaction.
2.4. The obligation for the sale of the export revenues to the Central Bank of the Republic of Türkiye (“Central Bank”).
As a part of the policy of protecting the value of Turkish currency, Additional Article 1 of the Export regulates obliges the exporters to sell the 40% of the export revenues to the Central Bank as follows:
“As of the effective date (18.04.2022) of this article, at least 40% of the export values stated in the IBKB or DAB (Foreign Exchange Purchase Certificate) shall be sold to the bank issuing the IBKB or DAB. On the same day, these amounts shall be sold by the bank to the Central Bank at the forex buying rate announced by the Central Bank on the transaction day and shall be transferred to the account of the Central Bank at the bank issuing the IBKB or DAB. The full equivalent of the sold amount shall be paid by the bank to the exporter in Turkish currency.”
Therefore, following the repatriation of the export values, 40% of the values shall be converted to Turkish Liras through the bank issuing the IBKB or DAB. Although this obligation aims to protect the value of the Turkish currency by obliging the exporters to convert a part of their revenues from foreign currency to Turkish Liras, it has also been criticized by the exporters. Since a considerable number of exporters in the market are obliged to make payments to their suppliers in foreign currencies, they are willing to use the export revenues they repatriated in foreign currencies to make the necessary payments to their suppliers. However, since they are obliged to convert at least 40% of the export revenues, under market conditions it is a well-known fact that exporters first convert 40% of the export revenues into Turkish Liras and then again re-buy foreign currency with the Turkish Liras they receive and make payments to their suppliers by following this method. While this does not create a direct loss for the exporters, under the current fluctuating foreign currency rates, this situation causes currency losses for the exporters, which secondarily causes more price reflection to the consumers.
2.5. Country based exemptions.
As mentioned above the general rule is to repatriate the export revenues within 180 days of the date of the actual export. However, the Export Regulation enacts exemptions for repatriation obligation on a country basis which the export revenues are generated from.
2.5.1. Countries of which the revenues generated from export transactions are 100% exempt from the repatriation obligation.
Article 4/6 of the Export Regulation states that the export revenues generated from the countries listed under Appendix – 2 of the Export Regulation are exempt from the repatriation obligation.
Therefore, the exporters shall be entitled to free disposition over the export revenues generated from the countries mentioned in the above list.
2.5.2. Countries of which 50% parts of the revenues generated from export transactions exempt from the repatriation obligation.
Article 22 of the Export Regulation states that 50% parts of the export revenues generated from the countries listed under Appendix – 3 of the Export Regulation are exempt from the repatriation obligation.
Therefore, the exporters shall be entitled to free disposition over 50% of the export revenues generated from the countries mentioned in the above list.
3. The impossibility of repatriation of the export revenues due to force majeure events or justified circumstances and the exporter’s request for extra time.
As explained under Section 2.3, the export transaction and the export account should be closed upon the issuance of the IBKB by the intermediary bank. However, in case the export accounts are not closed within the 180-day period, according to Article 8/3 of Communique No. 2018-32/48, the intermediary bank is obliged to notify the Tax Authority of this situation within 5 days from the end date of the 180-day period. Following the intermediary bank’s notification, within 10 days from the date of notification, the Tax Authority shall notify the exporters regarding the closure of the export accounts by granting them a 90-day period to complete the closure or to inform the Tax Authority in case there are some force majeure events or justified circumstances that prevent the exporters from repatriating the export revenues and closing the export accounts.
3.1. Force Majeure Events.
According to Article 9 of Communique No. 2018-32/48 the conditions that may be determined as a force majeure event are as follows:
a) The dissolution, bankruptcy of the exporter or importer company, the declaration of concordat of the exporter or importer company or the importer or exporter company permanently suspends its activities, in case of a postponement of bankruptcy decision is given about the importer or exporter companies, the death of the owner of the sole proprietorships.
b) Strike, lockout, and general average (jettison) conditions.
c) The impossibility of closing the accounts due to the decisions and transactions of the official authorities of the exporter or importer country or the transactions of the correspondent banks.
ç) Natural disaster, war, and blockade conditions.
d) Loss, damage, or destruction of the goods.
e) Filing a lawsuit or application to arbitration due to a dispute.
In the case of a force majeure event, the party with the burden of proof for proving the force majeure event is the exporter, and the force majeure event shall be proved by the exporters with the following documents:
1. In the case of a force majeure event stated under subparagraphs a) and e) of the force majeure events list, this situation shall be proved by the exporters with the documents obtained from the competent authorities.
2. In the case of a force majeure event stated under subparagraphs b) and ç) of the force majeure events list, this situation shall be proved by the exporters with the documents obtained from the competent authorities of the country where the importer is located or obtained from the importer or buyer companies in case the documents are approved by the local chambers (excluding the war and blockade conditions).
3. In the case of a force majeure event stated under subparagraph c) of the force majeure events list, this situation shall be proved by the exporters with the documents obtained from Turkish competent authorities, the competent authorities of the country where the importer is located, or from correspondent banks.
4. In the case of a force majeure event stated under subparagraph d) of the force majeure events list, this situation shall be proved by the exporters with the documents obtained from insurance companies, international surveillance companies, or competent authorities of the relevant country.
3.1.1. Consequences of the force majeure events and exporters request for extra time.
In case the exporters fail to repatriate the revenues that they generated from export transactions due to the force majeure events specified under Article 9 of Communique No. 2018-32/48, and in case the exporters meet the requirements to prove the existence of the force majeure events, according to Article 27/1 of the Export Regulation, additional six-month periods for each time shall be granted by the relevant Tax Office to the exporters during the continuation of the force majeure event.
Additionally, Article 27/6 limits the additional time period by stating that in case the force majeure event continues at the end of the 24 months extended period, the Republic of Türkiye Ministry of Treasury and Finance is authorized to examine the requests of the exporters for the closure of the open export amounts.
3.2. Justified Circumstances.
While the justified circumstances are not specified in the relevant legislation as its specified for the force majeure events, Article 9/3 of Communique No. 2018-32/48 defines the justified circumstances as follows:
“Circumstances other than force majeure events, but which prevent the export revenues from being brought to the country within the repatriation period and which can be certified by official records, may be considered as justified circumstances by the Tax Authorities.”
Therefore, it can be interpreted that the circumstances that are not within the scope of the force majeure events list specified under Article of Communique No. 2018-32/48, but which prevents the export revenues to be repatriated can be determined by the Tax Authority as justified circumstances, since the Tax Authorities are empowered to determine the justified circumstances through the Communique No.2018-32/48.
3.2.1. Consequences of the justified circumstances and exporters request for extra time.
In case the exporters fail to repatriate the revenues that they generated from export transactions due to the justified circumstances, provided that it is certified by official records, according to Article 27/2 of Export Regulation, for the first six months period the Tax Authority is authorized to grant additional 3 month periods until the end of the first 6 months and in case the justified circumstances continues for more than 6 months, the Republic of Türkiye Ministry Treasury and Finance is authorized to examine and finalize the requests of the exporters.
3.3. International Sanctions
International sanctions applied in the banking transaction may also create an impossibility to repatriate the revenues generated from export transactions. Article 23/4 of Export Regulation cover the impossibilities due to the international sanctions as follows:
“The export accounts that remain open as a result of the banks’ rejection of the export revenues and not issuing the IBKB documents due to the international sanctions, these exports accounts shall be closed by the relevant Tax Authority upon the exporters submit the relevant bank letter containing the reason of rejection of the bank within the notice period.”
Therefore, in case the export revenues cannot be repatriated due to the banks’ rejection of the relevant amounts because of the international sanctions, the exporters shall submit the information letter which should be issued by the bank by stating the reason of the rejection to the relevant Tax Authority to be able to close the export amounts.
3.4. Special exemption for the exports revenues generated from the export transactions to Russia and Ukraine.
According to the Republic of Türkiye Ministry of Treasury and Finance’s directive dated 07.04.2022, Provisional Article 1 has been added to the Export Transaction, which regulates a special exemption for the export revenues generated from the export transaction to Russia and Ukraine as follows:
“Regarding the export transactions that have been or will be carried out to Ukraine and Russia, it is possible to accept the export revenues in Turkish Liras even if they are declared in foreign currencies.”
Therefore, for the export transaction to Russia and Ukraine, it is possible to bring the export revenues in Turkish Liras, even if they are declared in foreign currencies. However, since bringing the export revenues from Russia and Ukraine even in Turkish Liras can be compelling for the exporters, as the international money transfer systems such as SWIFT system may not be practicable for the transfers involving Ukraine and Russia, the effectiveness of this amendment of Republic of Türkiye Ministry of Treasury and Finance can be determined argumentative under the current conditions.
4. Legal sanctions in case of breach of the repatriation obligation.
In case of a breach of the repatriation obligation, Article 3 of the Currency Protection Law enacts two different types of legal sanctions in the form of administrative fines as follows:
4.1. Fixed Administrative Fine.
The fixed administrative fine may be applied in case of a breach of the repatriation obligation is defined under Article 3/1 of the Currency Protection Law as follows:
“Any person who violates the obligations regulated in the general and regulatory acts of the President of the Republic of Türkiye in accordance with the provisions of this Law shall be imposed with an administrative fine from 52.000,00 Turkish Liras to 418.000,00 Turkish Liras.”
According to Article 3/6 of the Currency Protection Law, if the breach is committed for the benefit of a legal entity, the relevant legal entity shall also be imposed an administrative fine in the same amount.
Therefore, in case of a breach of the repatriation obligation a fixed administrative fine may be applied against the breaching exporters.
According to the General Communique of Tax Procedure Law numbered 554, the revaluation ratio applicable for 2023 is announced by the Republic of Türkiye Ministry of Treasury and Finance as 58,46%. The applicable amount of the fixed administrative fines mentioned in this section are indicated according to our in-house calculation.
4.2. Proportional Administrative Fine.
Independently of the fixed administrative fine defined under Article 3/1 of the Currency Protection Law, Article 3/3 regulates a proportional administrative fine to be imposed in case of a breach of the repatriation obligation as follows:
“In case the ones who import and export all kinds of goods, assets, services, and capital, or who act as intermediaries in these transactions, fail to bring their receivables arising from these transactions into the country in accordance with the provisions of the decisions taken pursuant to Article 1 and within the periods determined in these decisions, shall be punished with an administrative fine equal to five percent of the fair value of the assets they are obliged to bring into the country. Those who bring their receivables to the country until the decision on administrative fine is finalized shall be imposed an administrative fine in accordance with the provision of the first paragraph [Article 3/1 of the Currency Protection Law (fixed administrative fine)]. However, the administrative fine shall not be more than two and a half percent of the money to be brought into the country.”
Therefore, a fixed administrative fine and a proportional administrative fine may be imposed on the exporters who breach the repatriation obligations, and the public prosecutor is authorized to impose the administrative fines defined under Article 3/1 and Article 3/3 of the Currency Protection Law.
The repatriation obligation can be defined as a precaution that serves the purpose of protecting the value of the Turkish currency. Mainly, it aims to protect the value of the Turkish currency by obliging the parties involved to bring the revenues generated from these transactions into the country to protect the economic value of the exported goods and services in the country.
While it is mandatory for the exporters in particular to repatriate the revenues they granted from their export transactions, they may not be able to fulfill these obligations for reasons such as force majeure events, justified circumstances, and international sanctions that may be beyond their control. Therefore, in the presence of issues that prevent the exporters from fulfilling their repatriation obligation, the exporters should notify the competent authorities regarding the inability and/or impossibility within the period and with the necessary documents regulated in the relevant legislation. Otherwise, the exporters will carry the risk of being subject to the legal sanctions specified in the Currency Protection Law.
KESIKLI LAW FIRM
Att. Dr. iur. Ömer Kesikli Att. Didem Ataün Att. Onur Durak
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