The Analysis Of The Communiqué On The Limits Of The Foreign Exchange Prohibition In Terms Of Employment Contracts

October 18, 2018

On 13.09.2018, with the Presidential Decree no. 85, some provisions were added to the ‘’Decree No. 32 on the Protection of the Value of Turkish Currency’’ and accordingly ‘’the prohibition of the determination of contract price or other contractual obligations in foreign currency or foreign currency indexed, in some type of contracts between Turkish Residents’’(‘’The Foreign Currency Prohibition’’) has been regulated. Thereafter, “The Communiqué on the Resolution No. 32 on the Protection of the Value of Turkish Currency’’ (the “Communiqué’’) prepared by the Ministry of Treasury and Finance has been published in the Official Gazette on 06.10.2018. With the Communiqué; there are some exceptions to this restriction on the determination of foreign currency or foreign currency indexed price. These exceptions are based on the sub-types, the parties and execution place of the contractual obligations of the contracts listed in the Decision regulating The Foreign Currency Prohibition. In this text, the Communiqué is analyzed in regard to Employment Contracts. With the Communiqué, the following Employment Contracts are stated within the scope of Foreign Currency Prohibition: The Employment Contracts signed by and between public institutions and organizations and third party institutions The Employment Contracts signed by and between Turkish residents and Commercial airline companies operating in passenger, freight or mail transportation; Companies providing technical maintenance services for air transport vehicles, engines and parts thereof; Operating license to perform ground handling services at airports within the scope of the civil aviation legislation, the field or the authorized public or private legal entities with business founded by concerned organizations and institutions in the status and companies directly or indirectly capital of at least 50% of the partnership owned shares ratio However, The Employment Contracts that are performed abroad; or The Employment Contracts where the employee is not a Turkish citizen; The Employment Contracts that are signed by non-Turkish residents’ Turkish branches, representative offices, liaison offices; Turkish companies in which a non-resident person directly or indirectly holds 50% or more of the share capital; and free zone companies, only for their activities in the free zone has been excluded. In the same Communiqué, there are some provisions that determine the scope and limits of the aforementioned Foreign Exchange Prohibition in terms of the settlement date, price type and date of the contract; and there are some regulations on the exchange rate and increase rates that should be taken into account in the calculation of the re-value. In the Communiqué, there are examinations related to residential requirement in Turkey. According to these examinations; In terms of associations and extensions on abroad, belonging Residents in Turkey: Branches, agencies, offices, liaison offices, operated or managed funds, Companies with over fifty percent of shareholdings; and Companies with direct or indirect ownership are within the scope of the prohibition and they are determined as resident in Turkey. Concerning the Price: The prices included in the negotiable instruments to be regulated within the scope of contracts that cannot be determined in terms of foreign currency or foreign currency indexed within the scope of the prohibition. Contracts indexed to the precious metals and/or commodities whose price is determined in foreign currency in […]

Read more