| TAX CIRCULAR NO: 2025-56 | DATE: 09.03.2025 |
This regulation applies to movable sale contracts made between residents in Turkey, except for vehicle sales contracts. The change took effect on March 6, 2025.
This regulation represents a significant change in the commercial life of Turkey. Previously, it was generally prohibited to make payments in foreign currency or indexed to foreign currency for movable sale contracts between residents in Turkey. However, the new Presidential Decree has now freed up the determination of amounts in foreign currency or currency-indexed amounts for movable sale contracts, excluding vehicle sales.
Business Implications:
Convenience for Trading Companies:
Domestic trading companies earning foreign currency can now set contract amounts in foreign currency or indexed to foreign currency, offering flexibility for companies that want to hedge against currency fluctuations.
Currency Risk Management:
Previously, since transactions could not be made in foreign currency, many companies were exposed to currency risk, and contracts had to be made in TRY. With the new regulation, companies can now make agreements in foreign currency and protect themselves against currency fluctuations.
Especially Important for Trade in Imported Products:
For companies that trade in imported products and have to purchase their goods in foreign currency, this decision is a major advantage because they can now make sales contracts in foreign currency, leading to a more stable pricing process.
Vehicle Sales Excluded:
Particularly, car dealerships and auto galleries will still not be able to make sales in foreign currency. This means that the car trade must still be conducted in TRY.
Who Benefits?
Importers and Exporters: Since their costs and sales are in foreign currency, this provides significant ease in pricing and currency risk management.
Companies with Costs in Foreign Currency: Especially companies dealing with imported raw materials, machinery, and electronics benefit from this decision.
Large Companies and Companies with Foreign Partnerships: Also advantageous for large companies with costs in foreign currency.
Who is Disadvantaged?
Companies Only Earning Income in TRY: Companies that only earn income based on TRY might struggle to protect themselves against currency fluctuations in contracts made in foreign currency.
Small Businesses: Particularly small tradespeople and SMEs that operate only in TRY might find it difficult to adapt to the currency risk brought about by this change.
Conclusion: This regulation is a step that aligns with the realities of commercial life. It provides flexibility for companies with foreign currency earnings, while companies operating in TRY need to be mindful of the currency risk. Particularly for import companies, this is a positive development, but companies that do not earn in foreign currency must carefully manage currency fluctuations.