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Bringing Export Prices to Turkey and The Related Sanctions

MGC Legal team has examined the subject of “Bringing Export Prices to Turkey and The Related Sanctions” in detail, one of the most researched topics on the internet. Here are the details…

According to article 3 of the law on the Protection of The Value of the Turkish Currency, “Those who import and export all kinds of goods, assets, services, and capital or which mediate in these matters, those who do not bring their receivables arising from these transactions to the country per the provisions of the decisions taken under article 1 and within the periods determined in these resolutions, are punished with an administrative fine of up to five percent of the current market value. Until the decision regarding the administrative fine is finalized, those who bring their receivables to the country are given an administrative fine following the first paragraph. However, the administrative fine to be imposed cannot be more than two and a half percent of the money to be brought into the country.” is stated.

What is The Obligation to Bring Export Prices to The Country?

Some legal obligations have been introduced to protect the Turkish currency’s value. One of them is the obligation to bring export prices to the country. In other words, if there are goods, assets, services, and capital to be exported and imported, it is aimed to bring the money arising from these transactions to our country and keep it here.

According to article 3 of the Communiqué on The Protection of The Value of Turkish Currency No. 32: The costs related to the export transactions carried out by the persons residing in Turkey are transferred or brought to the bank intermediating the export directly and without delay, following the payment of the importer. The period for bringing the fees to the country cannot exceed 180 days from the actual issue date. At least 80% of the fees had to be sold to a bank before 31.12.2019.

However, as of 31.12.2019, when Communiqué No. 2019-32/56 entered into force, the obligation to sell at least 80% of the said amounts to a bank has been abolished. Likewise, in accordance with the regulation in the temporary article 1 of the Communiqué mentioned above, since the provisions of this Communiqué in favor of the exporter will be applied for the export accounts that are open as of 31.12.2019, there is no obligation to sell at least 80% of the aforementioned export prices to a bank.

In other words, it will be sufficient to bring the export price to the country within 180 days from the actual export date as of this date. The most important change brought by the Communiqué was the abolition of the requirement that at least 80% of the export price be converted into Turkish lira and tied to a Foreign Exchange Purchase Document.

According to the regulation made with the 1^st, 2^nd, and 3rd articles of the Communiqué; it is sufficient to bring the export prices to the country within the specified period, and the obligation to convert them into Turkish lira has been abolished. In addition, with the new regulation, it has become possible to bring a different type of foreign currency into the country in return for the export declared to be made in foreign currency.

Prices related to export transactions can be brought into the country using one of the following payment methods.

• Letter of Credit Payment,
• Payment Against Documents,
• Payment Against Goods,
• Payment by Letter of Credit with Acceptance Credit,
• Payment Against Documents with Acceptance Credit,
• Payment Against Goods with Acceptance Credit,
• Advance Payment,
• Bank Payment Obligation.

It is essential to bring the export prices to the country in the declared Turkish currency or foreign currency, and it is possible to bring foreign currency in return for exports made in Turkish currency. It is obligatory to declare the export prices to the customs authorities if the goods are brought to the country with the persons.

What Are The Country-Based Practices in Bringing Export Prices to Turkey?

While the exemption is granted for importing the prices related to export transactions made to Iran, Syria, and Lebanon, the list of exempted countries has been updated as 29 with the new regulation.

Which Countries Are Recognized as Exceptions For Bringing The Export Prices to Turkey?

The country list is as follows: Afghanistan, Guinea, Nigeria, Angola, Iran, Senegal, Belarus, Cameroon, Somalia, Benin, Kenya, Sudan, Djibouti, Kyrgyzstan, Syria, Ethiopia, North Korea, Saudi Arabia, Ivory Coast, Cuba, Tajikistan, Palestine, Liberia, Tanzania, Gabon, Lebanon, Venezuela, Ghana, Moldova, and Yemen.

Export transactions made by Turkish Armed Forces Foundation companies are also included in the exemption. These are service exports, transit trade, sales made with special invoices to non-residents, sales made by calculating VAT to non-residents, micro-exports, and export transactions with an amount not exceeding 5,000 US dollars or equivalent foreign currency or Turkish lira within the scope of the free zone transaction form.

While all the costs are free to be saved, with the new regulation, fifty percent of the expenses are freed in export transactions made to the following countries.

Which Countries Are Allowed to Save 50% of The Amount Included in The Customs Declaration For The Return of The Export Price to Turkey?

The country list is as follows: Azerbaijan, Uzbekistan, Algeria, Tunisia, Morocco, Turkmenistan, Kazakhstan, Ukraine, and Egypt.

Export For Cash Foreign Exchange

Exports to be made in exchange for cash in trade must be carried out within 24 months. Suppose it is understood that the export cannot be made within 24 months due to force majeure and justifiable situations. In that case, the exporter is transferred/brought to the bank where the cash price is transferred/brought by the exporter before expiration, provided that it is approved by article 9 of the Communiqué No. 2018-32/48. The bank can give the exporter additional time of up to one year. If the force majeure/justified situation continues at the end of the total 1-year additional period provided by the bank, the transactions to be carried out within the scope of the Communiqué No. 2018-32/48 shall be decided by the Ministry of Treasury and Finance.

The duration of use of the cash exchange provided for export, deliveries, and foreign exchange-earning services and activities within the scope of the Tax, Painting, and Fees Exemption Certificate are up to the document time (including additional periods).

Foreign currency held in the spot that is not returned all at once or cannot be exported within the time frame will be subject to prefinance rules. The buyer’s use period shall be deemed extended as an additional time provided in the event that the prefinance provisions are extended within the parameters of the applicable legislation of the export contracting periods.

A prefinance loan is used for preliminary financing. It is a specific kind of loan used for obtaining goods or services for the delivery and sale of situations that export or are comparable to export.

What is The Timeframe For Bringing Exports With Features to Turkey?

• The price of exports to be made by contractor companies abroad must be brought to the country within 365 days.
• Following the final sale of the prices in exports to be made through consignment, the costs of the goods sent to be sold to the international fairs and exhibitions should be brought to the country within 180 days following the end of the fair or exhibition.
• If the goods made temporarily exported abroad are not brought to the dormitory within the given period or additional period or sold within these periods, the sale price must be brought to the country within 90 days from the end of the period or the final sales date.
• Within the framework of the export regime and financial leasing legislation, it is obligatory to bring the export price to the country within 90 days following the maturity dates set out in the credit sales or leasing agreement.
• In case of more than 180 days of maturity for the collection of prices in the contracts of the export transactions, it is obligatory to bring the fees to the country within 90 days from the end of the maturity.

In addition, since 31.12.2019, when the Communiqué numbered 2019-32/56 entered into force, the obligation to convert the export prices to the Turkish lira has been abolished. The export prices in the export transactions, which are included in article 6 of the Communiqué, are brought to the country in different periods. The obligation of the foreign currencies to be translated into Turkish lira and the connection of the Foreign Currency Exchange Certificate was abolished.

Responsibility

• Exporters shall be responsible for bringing the exported prices to the dormitory, selling to banks, and closing the export account during the period.
• If the commercial risk is undertaken by banks or factoring companies by purchasing the right to receivables, the Ministry of Treasury and Finance is authorized to determine those responsible for bringing the export price to the country.
• In addition, the banks that mediate the export are obliged to monitor the export prices to the country and to sell.
• In exporting goods for commercial purposes, the intermediary banks must close the accounts related to exports that come to the dormitory.

Closing The Account, Notice, and Additional time

The general rule is that the export price shall be transferred or brought to the bank that mediates the export directly and without delay following the importer’s payment. The time of bringing the prices to the dormitory can be 180 days from the date of de facto export.

Per the exchange legislation, it is optional to bring the export prices from some countries to Turkey. The periods of getting the export prices to the country can be determined differently in the characteristic exports. If there is an arrangement regarding introducing export prices to the country, the export prices should be brought to the country within the periods determined in that regulation, and the documents showing that these currencies are brought to the dormitory should be issued.

This document is currently an “Export Price Acceptance Certificate” in practice. Since the export price brought to the banks is not obliged to convert to the Turkish lira, it is sufficient to get the export price to the dormitory, and the banks will issue the Export Fee Acceptance Certificate for the expulsion of the compliance of the legislation, and the closure of the export account can be made according to this document.

According to provisional article 1, it is possible to use the “Foreign Currency Purchase Certificate” by the banks instead of the “Export Fee Acceptance Certificate” until the information system, which will track export prices, is put into practice by the Ministry of Treasury and Finance.

In practice, the issue important in exchange legislation is the “closure of export accounts“. The export price, which needs to be understood from the closure of export accounts, is brought to the dormitory within the period determined from the de facto export date of the foreign currencies and the “Export Fee Acceptance Certificate Regulation”, and the export account is closed by the bank. Of course, the order of implementation may change in exports that are paid by cash or similar methods.

While exporters are responsible for collecting the export price and closing the export account during the period of introduction (including additional periods), the intermediary banks are only obliged to monitor the closure of the accounts.

In the closure of export accounts;

• Customs Declaration Sample or Customs Declaration Information,
• Related Export Price Acceptance Certificates,
• Sales Invoices,
• If any, discounts and deducted documents are required.

In exports, the path followed in “account closure” is as follows;

1. In exporting goods for commercial purposes, the intermediary banks close the accounts related to exports that come to the dormitory.
2. It is necessary to monitor the introduction of export prices to the country within the period or to close the open accounts within the limits of the ability to be closed by the intermediary banks.
3. The intermediary banks must notify the accounts not closed within the period to the tax office or the Tax Office Directorate within five working days. However, with a regulation, the exporters were given the right to close their accounts in the bank during the 5-day notice period of the banks.
4. A 90-day warning is sent to the relevant persons within ten working days following the notice made by the banks by the tax office.
5. Within these 90 days, closing the accounts or documenting the force majeure or justified situation is obligatory.

The aim of the regulations made on the export prices is to ensure that the export prices are brought to the country within the periods (including additional periods). Suppose there is a lack of amount in bringing export prices to the country, or the export prices cannot be brought at all within the specified periods. In that case, the exchange legislation takes into account three situations in favor of exporters.

• Erasure (the dictionary meaning of the word is deleting something written by drawing something written, subtraction, ignoring)
• Force Majeure (force majeure reason; it is defined as an inevitable, compelling reason),
• Rights Situation (justified situation; it is defined as an obstacle to the work to be done, although it is not considered in this context).

In accordance with the existence of the last two situations and if the official document is officially documented, additional periods are granted to individuals and companies to bring their foreign currency to the country.

According to the exchange legislation that is being applied;

1. Regardless of the payment method, within the period during which the export prices must be brought to the country.

a. Open accounts up to 15,000 US dollars (including) in export transactions up to 15,000 US dollars or equal to each customs declaration on the basis of each customs declaration.

b. In the export transaction up to 1,000,000 US dollars or equal on each customs declaration basis, it explodes up to 10 %of the declarations (which corresponds to open accounts up to 100,000 US dollars),

It is closed by abandoning.

2. By the Tax Office,

a. After the country’s export prices were introduced, but as long as the current export accounts are incomplete and fall within the aforementioned parameters and the 90-day warning period that the tax office gave the exporters,

b. In customs declarations up to 2,000,000 US dollars or equal, force majeure and justifiable circumstances account for up to 10% of the declarations (which corresponds to open accounts up to 200,000 US dollars),

It is closed by abandoning.

3. The Ministry of Treasury and Finance is authorized to close the open export accounts of over 200,000 US dollars by considering the force majeure and justifiable situations.

In addition, article 7 of the Communiqué numbered 2019-32/56 has been amended by article 10 of the Communiqué numbered 2018-32/48. Accordingly, the obligation to bring up to 15.000 US dollars in each customs declaration has been abolished. Consequently, all declarations below 30,000 US dollars will be abandoned by banks. In addition, if the export price is over 15.000 US dollars and the amount that cannot be brought to the dormitory is below 15,000 US dollars, these declarations will also be abandoned.

It is stated that the transactions to be carried out within the scope of this article may be carried out by the relevant Tax Office Departments or Tax Office Directorates within 90 days of warning.

Another issue that needs to be considered here is what force majeure and justified state practices are.

Major Cause Status

In force majeure, additional time shall be given by the tax office or the Tax Office Directorate to continue the force majeure.

In the presence of justified situations other than force majeure, additional time requests of up to six months regarding the closure of the accounts are made by the relevant tax office or Tax Office Directorate in quarterly periods, based on the written declaration of the companies stating the justified situation, by the additional six-month period. Time requests are reviewed and finalized by the Ministry of Treasury and Finance.

Due to the existence of force majeure, the requests for the continuation of the force majeure at the end of the 24-month additional period given by the tax office or the Tax Office Directorate shall be examined and finalized by the Ministry of Finance.

In addition, the title of the 9th article of the Communiqué no 2019-32/56 was changed to “Force Majeure and Justified Situations”, and as the 3rd paragraph of the article, “Except for force majeure situations, but which prevent the export value from being brought into the country within the time limit and which can be documented with official records, may be considered as a justified situation by the Tax Office Directorates or the Tax Office Directorates.” clause has been added.

Thus, it has been made possible for the tax offices or Tax Office Directorates to evaluate that the export prices could not be brought to the country within the scope of the justified situation if it is documented with official records.

Determination of The Export Price

In determining the export price, the value in the 22^nd digit of the GB is taken as the basis. However, if the amount specified in this household includes the freight and/or insurance in addition to the property price, and if the amount registered in the 22nd house is equal to the amount registered in the invoice, the amount registered on the invoice shall be taken as the basis.

If the amount registered in the 22nd digit of the GB is different from the amount registered in the invoice and the foreign exchange amount registered in the 22^nd house of the GB is of a foreign currency other than the US dollar, the value shown as the US dollar is taken into consideration in the 46^th household of the GB. If the values declared in GB are different during the control and the values determined by the Customs Directorates are different, the records in the “E” or “D” digit of the GB are considered in determining the export price. In the export, the amount registered in the final sales invoice is based on the export price. Central Bank cross rates are used on the GB registration date in the calculations to be made for closure.

Mandatory Documents For The Closure of Export Account

In order to close the export account, GB Sample / GB Information, relevant export price acceptance documents, sales invoice, and discount and deducted documents are obliged to submit to the intermediary bank.

Export Price Acceptance Certificate

While issuing the Export Price Acceptance Certificate by the banks;

• It is possible to write the sequence number given by banks on the serial number line.
• As stated in the 13^th article of the Export Circular, in the case of a collection with methods titled “Collection of the Export Fee by Other Methods”, this should be stated in the “Recruitment Method” line.
• The “Amount-Currency” line under the heading of the price brought to the country should be stated in addition to the US dollar equivalent of the price.
• The price transfer date to the company account will be recorded in the “Account Transfer Date” line, and it is also possible to specify the value date.
• Considering the date of issue of the Export Value Acceptance Certificate or the Foreign Exchange Purchase Certificate and the information and documents submitted by the exporter, in the explanation part of these documents, appropriate explanations such as “issued within the period of bringing a price and/or notice“, “issued within the period of warning“, “issued within the additional period” or “issued after the expiry of the compensation, notice, warning, and additional periods” statements should be specified.

Until the system in which the export prices will be tracked is put into practice by the Ministry of Treasury and Finance, only one of the Export Value Acceptance Certificates or Foreign Currency Purchase Documents can be issued for each transaction in the acceptance process by the banks.

What Are Penalty Actions?

In law No. 1567 on the Protection of the Value of the Turkish Currency, there are two types of misdemeanors regarding the obligation to bring export prices into the country. The law envisages a fixed penalty (art. 3/1) for acts contrary to the obligations in the regulatory acts of the administration and a relative penalty of 5% of the export value (art. 3/3) for not bringing export prices into the country.

However, those who bring their receivables to the country until the decision regarding the administrative fine is finalized will be given a fixed penalty, not a proportional one (art. 3/3). On the other hand, an upper limit has been set for the amount of the fixed penalty to be imposed in this way. The fixed penalty shall be at most 2.5% of the export value to be brought into the country (art. 3/3).

Fixed Penalty

If a person violates the obligations in general, they are punished with an administrative fine from 14,227 Turkish lira to 118,566 Turkish lira. The lower and upper limits determined for 2022 within the scope of the increase in the valuation rate are shown. The general and regulatory procedures in question are the obligations brought by the Communiqué on decision No. 32 on the Protection of the Value of Turkish Currency.

Relative Punishment

Those who import and export all kinds of goods, assets, services, and capital, or those who mediate in these works, do not bring their receivables arising from these transactions to the country in accordance with the provisions of the decisions taken per the 1st article and within the periods determined in these decisions, are punished with administrative fines. Until the decision regarding the administrative fine is finalized, those who bring their receivables to the country are given an administrative fine following the first paragraph. However, the administrative fine to be imposed cannot be more than two and a half percent of the money to be brought into the country.

Those who engage in commercial activities without obtaining the necessary permit or document in the matters that require an operating permit or authorization certificate pursuant to the decisions, regulations, and communiqués issued based on law No. 1567 and other general and regulatory procedures, are subject to an administrative fine from fifty thousand Turkish liras to two hundred and fifty thousand Turkish liras. And all activities in the workplace where the unauthorized activity is carried out are stopped from one month to six months, and in case of repetition, it is stopped permanently. However, suppose it is understood from the announcements and advertisements of those who operate without authorization or the nature of the work they do, that they have opened or operated the said workplace only to engage in activities that require an operating permit or authorization. In that case, the activity in the said workplace is permanently stopped. The governorates carry out suspension procedures upon the request of the Undersecretariat of the Treasury.

What is The Responsibility of Company Managers?

If these misdemeanors are committed for the benefit of a legal person, the same administrative fine is imposed on the relevant legal person. In other words, the responsibility belongs to the real person who commits these acts. However, the same amount of punishment will have to be imposed on the legal person. There is a risk of separate penalties for the company and company executives in terms of both fixed and relative penalties.

How is The Administrative Fine Calculated?

The lower and upper limits of these fixed penalties are indicated in the law, and they are arranged between them according to the gravity of the act at the prosecutor’s discretion. Legal amounts are updated every year according to the revaluation rate. In practice, prosecutors have the experts to calculate these amounts.

The proportions of the relative fines are also shown in the law and are calculated over the export prices that are not brought into the country. If the export value not brought into the country is in foreign currency, the foreign currency selling rate of the Central Bank for this currency will be taken as the basis for the calculation of the administrative fine as of the date of the act (art. 3/7).

In case of recurrence, the penalties are applied in two layers (art. 3/9).

For the periods between the date of the crime and collection, delay interest is applied to the administrative fine at the late fee rate determined in accordance with law No. 6183 (art. 3/8).

How to Close an Export Account?

It is documented that the export prices have been brought into the country by closing the export account with the case following institution. Detailed regulations on this subject are included in the Export Circular of the Central Bank.

Exporters are responsible for closing the export account (art. 26). Intermediary banks, on the other hand, are obliged to monitor whether the relevant amounts are brought into the country or not (Article 26). Exporters are required to bring the export prices to the country within 180 days -as a rule- from the actual export date (art. 4/1). The price brought into the country is tied to the export price acceptance document within the same period (art. 8). In order to close the export account, it is obligatory to submit the customs declaration sample and information, the relevant Export Value Acceptance Certificates, the sales invoice and the documents subject to discount and deduction to the intermediary bank (art. 25). If the export account is not closed in this way, the bank will notify the tax office within five working days (article 29).

The tax office sends a 90-day warning to the relevant parties within ten working days from the notification (art. 29/3). In the warning letter, it is requested that either the account be closed, or the force majeure situation be documented within this period. At this stage, the tax office makes the closing of the account (art. 23/3).

Those who do not take additional time and close their export account at the end of the 90-day warning period or the additional period given are reported to the prosecutor’s office by the tax office.

• Bank: Notifies the export costs not brought to the country within 180 (+5) days.
• Tax Office: Sends a 90-day warning within ten working days. If the account is not closed or additional time is not taken, it notifies the prosecutor’s office.
• Prosecutor’s Office: Arranges administrative fines.

Authority to Impose Administrative Fines

The Public Prosecutor’s Office is the competent authority to impose administrative fines in the law (art. 3/10). If the tax offices do not receive the prices within the 90-day warning period or the additional time is not received, direct notification is made to the prosecutor’s office.

Legal Remedy Against Administrative Fine

The remedy against administrative fines is regulated in the Misdemeanor Law.

If the prosecutor decides to punish them with a fine; for the annulment of the administrative fine issued by the Public Prosecutor’s Office, an “application” (objection) can be made to the Criminal Judgeship of Peace within 15 days from the notification of the decision (art. 27). In the opposite case, that is; if it is decided that there is no room for the application of an administrative sanction, the tax office will be able to appeal against this decision.

Upon notification of the administrative fine, three-quarters of the fine can be paid by making a cash payment before applying for legal action. Then legal action can be taken again (art. 17/6).

Criminal Judges of Peace generally do not hold hearings. They first make an expert examination of the file and decide on the file after receiving the parties’ statements against the expert report.

It should be noted that if it is understood by the experts that the amount to be brought into the country has been brought to the country and that the open export commitment account of the customs declarations has been closed, it will be decided that there is no need to impose an administrative penalty without imposing an administrative fine.

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Further Reading: Advantages and Criteria of Being an International Trading Company.

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