Regulation on the Transfer of Export Proceeds to TURKEY

Pursuant to Article 12, Paragraph 1 of the Circular No. 2018-32/48 on the Protection of the Value of Turkish Currency issued by the Central Bank of the Republic of Turkey, and based on the provisions of the Communique on Export Proceeds (“Communique”), the procedures and principles regarding the transfer of export proceeds to Turkey are regulated.

Pursuant to Article 12, Paragraph 1 of the Circular No. 2018-32/48 on the Protection of the Value of Turkish Currency issued by the Central Bank of the Republic of Turkey, and based on the provisions of the Communique on Export Proceeds (“Communique”), the procedures and principles regarding the transfer of export proceeds to Turkey are regulated.

Obligation to Transfer Export Proceeds to Turkey

According to Article 4 of the Communique, the period for transferring export proceeds to Turkey cannot exceed 180 days from the actual export date. This 180-day period is the maximum allowed, and it is imperative that the proceeds are brought to Turkey directly and without delay following the payment by the importer.

As per Appendix 1 of the Communique, starting from April 18, 2022, at least 40% of the export proceeds linked to the Export Proceeds Acceptance Certificate (“EPAC”) or Foreign Currency Purchase Certificate (“FCPC”) must be sold to the bank that issued the EPAC or FCPC. Hence, the requirement to convert at least 40% of the export proceeds into foreign currency has been established.

Regarding the transfer period for export proceeds and the transfer of proceeds related to exports to certain countries:

1. If the contracts for export transactions foresee a collection period that exceeds 180 days from the actual export date, the transfer period for the proceeds shall not exceed 90 days after the maturity date. To determine the specified maturity, the exporter must present a written statement along with the contract containing the maturity date or a proforma invoice or bill of exchange substantiating the maturity to the intermediary bank.
2. Export transactions made to free zones are subject to the provisions of the Communique No. 2018-32/48.
3. For export transactions made to countries listed in Appendix 1, the provisions of Article 3, Paragraph 1 of the Communique No. 2018-32/48 shall not apply. Export proceeds to these countries are not required to be brought to Turkey.

For export transactions to countries with exceptions to the transfer obligation, the export proceeds will continue to be monitored through accounts receivable in the accounting records.

In accordance with Article 7 of the Communique, for exports not part of commercial transactions but due to special circumstances that require goods to be sent abroad, the following obligations shall apply:

• For exports conducted by contractor companies, the export proceeds must be brought to Turkey within 365 days.
• For consignments, the proceeds must be brought to Turkey within 180 days following the end of the international exhibition, fair, or week where the goods are sold.
• For goods temporarily exported abroad under relevant legislation, if they are not returned within the granted period or extended period, or if sold during such period, the proceeds must be transferred to Turkey within 90 days from the expiration of the period or the definitive sale date.
• Under the applicable Export Regime and Financial Leasing Legislation, export proceeds from credit sales or leasing transactions must be brought to Turkey within 90 days following the maturity date specified in the credit sale or leasing agreement.

Exports in Turkish Lira

Exports are generally conducted in foreign currency; however, Turkish lira may sometimes be used for exports. According to Article 9 of the Communique:

1. In order to accept the export proceeds in Turkish lira, except for advance payments and buyer company pre-financing, the sale contract, letter of credit, or bank guarantee letter must state that the proceeds will be collected in Turkish lira, or the invoice to be sent to the buyer must be issued in Turkish lira, or the Customs Declaration (“CD”) must state that the proceeds are declared in Turkish lira in item 22.
2. For exports to the Turkish Republic of Northern Cyprus, even if the export proceeds are stated as foreign currency in the documents mentioned in the first paragraph, they may still be accepted in Turkish lira.
3. If the export proceeds declared to be collected in Turkish lira are partially or entirely accepted in foreign currency, the Turkish lira amount recorded in item 22 of the CD will be converted to the applicable foreign currency using the more favorable exchange rates of the Central Bank of Turkey, calculated between the date the CD is issued and the date the proceeds are brought to the bank.

As per Temporary Article 1 of the Communique, export transactions made to Ukraine and Russia, whether declared in foreign currency or not, may be accepted in Turkish lira.

Additionally, according to Article 5, Paragraph 2 of the Communique, export proceeds must be brought to Turkey in the declared currency (Turkish lira or foreign currency), but it is possible to bring them in a different foreign currency.

Determination of Export Proceeds

For determining the export proceeds to be brought to Turkey:

• The value in item 22 of the CD is taken as the basis. However, if the amount indicated in this item includes the cost of goods, freight, and/or insurance, and if the amount recorded in item 22 of the CD matches the invoice amount, then the invoice value is taken as the basis.
• If there is a discrepancy between the amounts declared in the CD and the value determined by the customs authorities, the entries in the “E” or “D” fields of the CD shall be used to determine the export proceeds.
• For consignment exports, the value registered in the definitive sales invoice will be used as the export proceeds.
• In cases where the foreign currency declared in item 22 of the CD differs from the foreign currency paid to the exporter, the exchange rate for cross-currency transactions used by the Central Bank of Turkey on the actual export date shall be used for the conversion.

Export Proceeds Released for Free Use by the Exporter

For exports to countries listed in Appendix 2, it is sufficient to bring 50% of the export proceeds to Turkey, while the remaining 50% is left for the free use of the exporter.

In transactions such as service exports, transit trade, sales to non-residents with special invoices, VAT-included sales to non-residents, micro-export, and transactions carried out under the Free Zone transaction form for amounts not exceeding USD 5,000 or its equivalent in foreign currency or Turkish lira, the entire proceeds must be brought to Turkey; for exports to countries listed in Appendix 2, 50% of the proceeds are free to be disposed of by the exporter.

For exports conducted under the CFR and CIF delivery terms, the freight and insurance charges, as well as rental income derived from financial and commercial leasing agreements where the lessee does not have the right to purchase, are considered service fees and accepted as foreign currency.

“Justifiable Cause” in Delays in Transferring Export Proceeds to Turkey

Article 9 of the Communique has been amended to state that situations preventing the transfer of export proceeds within the specified period, although not considered as force majeure, may be recognized as “justifiable cause” by the Tax Directorate, provided they are officially documented.

Thus, the Tax Directorate may evaluate whether the export proceeds could not be brought to Turkey due to justifiable causes, if they are substantiated with official records.

Responsibility for Collection of Export Proceeds and Closure of Export Accounts

Exporters are responsible for the collection of export proceeds and the closure of export accounts within the stipulated period (including extensions). Intermediary banks are only responsible for monitoring the closure of these accounts.

The export proceeds that need to be brought to Turkey within 180 days must be linked to an Export Proceeds Acceptance Certificate. For closing the export account, a sample of the customs declaration, related EPACs, sales invoices, and documents related to deductions and offsets must be submitted to the intermediary bank. If the account is not closed in this manner, the bank will report the situation to the tax office within 5 business days.

Following such notification, the Tax Directorate will send a notice of default within 10 business days, giving the concerned parties 90 days to either close the account or provide evidence of force majeure. If the account is not closed, the Tax Directorate will report the case to the public prosecutor.

Export Proceeds Acceptance Certificate

In accordance with foreign exchange regulations, for exports to certain countries, there is no obligation to bring the proceeds to Turkey, and the timeframes for bringing the export proceeds to Turkey may be differently determined for special exports. If there are regulations regarding the transfer of export proceeds to Turkey, the proceeds must be brought within the timeframes set by those regulations, and documents confirming the transfer of these foreign currencies to Turkey must be issued. In practice, this document is the Export Proceeds Acceptance Certificate (“EPAC”). Since it is not mandatory to convert the export proceeds into foreign currency at the bank, banks will issue the “Export Proceeds Acceptance Certificate” to confirm that the export proceeds have been brought to Turkey within the prescribed time and in accordance with the regulations. The closure of the export account can be processed based on this certificate. According to Article 30 of the Communique, banks are required to issue the Export Proceeds Acceptance Certificate (“EPAC”) during the closure of export proceeds.

Sanctions and Administrative Fines

The obligation to bring export proceeds to Turkey is primarily based on foreign exchange regulations, and the fundamental law is the Law No. 1567 on the Protection of the Value of Turkish Currency.

According to Article 3, Paragraph 1 of the Law, “Any person who acts in violation of the obligations in the general and regulatory acts made by the President under the provisions of this Law shall be penalized with an administrative fine ranging from three thousand Turkish liras to twenty-five thousand Turkish liras.” This amount is adjusted annually according to the revaluation rate.

Additionally, under Article 3, Paragraph 3, “Those who import and export any goods, securities, services, and capital, or those who mediate such transactions, and fail to bring the receivables arising from such transactions to Turkey within the timeframes determined by the decisions made under Article 1 of this Law, will be penalized with an administrative fine equivalent to 5% of the market value of the goods or currency they are obligated to bring to Turkey. Until the decision regarding the administrative fine is finalized, those who bring their receivables to Turkey will be penalized according to Paragraph 1. However, the administrative fine imposed cannot exceed 2.5% of the amount that should have been brought to Turkey.”

Legal Recourse Against Administrative Fines

As per Article 3, Paragraph 10 of the Law, the competent authority for imposing administrative fines is the public prosecutor’s office. If the export proceeds are not brought to Turkey within the 90-day notification period or if an extension is not granted, the tax offices will report the case to the public prosecutor. In this context, a person may appeal the administrative fine issued by the Public Prosecutor’s Office to the Criminal Court of Peace within 15 days from the notification of the decision. Upon notification of the fine, the penalty may be reduced by paying 3/4 of the fine in advance, after which an appeal can be made. If the Criminal Court of Peace issues a decision against the appellant, an appeal can be made within 7 days, and the decision made by the higher court will be final.