Through the Presidential Decision dated 12 September 2018 and numbered 85 (“Decision”), the Decree on the Protection of the Value of Turkish Currency numbered 32 was set forth that real and legal persons resident in Turkey, with some exceptions, should not enter into contracts containing foreign currency or foreign currency indexed prices, and that the prices contained in existing contracts should also be converted into Turkish Lira. Following after the aforesaid Presidential Decision, the exceptions determined by the Ministry of Treasury and Finance (“Ministry”) were specified under the Communiqué numbered 2008-32 / 34 regarding the Decree No. 32 on the Protection of the Value of Turkish Currency (“Communiqué”).

Pursuant to the Announcement on Foreign Currency Based or Foreign Currency Indexed Contract Prices published by the Ministry on 13 October 2020 (“Announcement”); it has been announced that;

(i) the Communiqué determines the method of converting the contract prices to the Turkish Lira in cases where contractual parties cannot reach an agreement on returning to Turkish Lira, and also the rates of increase to be applied in the two-year transition period to the prices determined as Turkish Lira in the housing and roofed workplace lease contracts,

(ii) if the transition process ends at the end of the two-years period and the parties cannot agree again on the rate of increase to be applied to the amounts determined in Turkish Lira, then, the parties shall be  subject to the limits having the basis of change rate to be determined in accordance with the twelve-months averages of consumer price index stipulated under Article 344 of the Turkish Code of Obligations numbered 6098,

(iii) following after the expiry of the two-years period foreseen as the transition period, it shall not be possible to restart the implementation of the amounts in the aforesaid foreign currency based or foreign currency indexed contracts or it shall also not be possible to be determined again in foreign currency based or foreign currency indexed contract prices and in case of detecting any implementation in contrary, necessary sanctions shall be applied in accordance with the foreign exchange legislation.

In conclusion, with the Announcement, the Ministry has submitted to the public information that the foreign currency ban shall continue in the housing and roofed workplace lease contracts with exceptions, and the aforesaid foreign currency ban shall not be limited with two years, and that the increase in Turkish Liras after the two-years transition period shall be determined by having the basis of change rate to be determined in accordance with the twelve-months averages of consumer price index in accordance with Article 344 of the TCC.

You may reach the full version of the Announcement by clicking here.