Edition 31: 17 October 2016
Editorial Team:
Dr. E. Seyfi Moroğlu, LL.M., Işık Özdoğan, LL.M. and Bora İkiler, LL.M.
Obligations Apply Under Turkey’s Data Protection Regime From October 2016

The six month transition period for certain provisions under Turkey’s new data protection regime ended on 7 October 2016. As a result, penalties and certain obligations for transfering data to third parties and abroad now apply for personal data collected and processed in Turkey.

The Data Protection Law numbered 6698 (“Law”) was published in Official Gazette number 29677 on 7 April 2016, with certain provisions becoming effective six months after that date. Further information about the Law and its implementation can be found here.

Delays in Establishing Government Bodies and Mechanisms

The Law introduced a legislative structure and definition for a national data protection regulator: the Data Protection Authority and Data Protection Board. The Data Protection Authority will include the Data Protection Board and the Board’s President. Once the Board is established, it will then create and maintain the Data Controller Registry.

When the Law was published, it envisioned October 2016 as the deadline for establishing the Data Protection Board and Data Controller Registry. From October 2016, Companies are also technically required to register Data Controllers with the Data Controller Registry.

However, necessary secondary legislation has not been enacted yet. Similarly, neither the Data Protection Board nor Data Controller Registry have been established yet.

To date, only five member of the Data Protection Board have been appointed (via decision number 1129 from the Turkish Parliament on 5 October 2016). The remaining four members are expected to be appointed in the near future.

The Law’s New Obligations Apply Regardless

Despite delays in establishing the government bodies and mechanisms, the Law’s obligations apply regardless. Similarly, criminal offenses and punitive measures now apply for failure to comply with the Law’s obligations.

Therefore, from 7 October 2016, the following obligations apply to persons and companies which deal with personal data:

– Register with the Data Controller Registry (if and when the Registry is established).

– Comply with the requirements under Article 8 of the Law regarding data transfers to third parties.

– Comply with the requirements under Article 9 of the Law regarding data transfers abroad.

Please see this link for the full text of the Law (only available in Turkish).

Read More
Turkey Publishes Further Details of Stamp Tax Exemptions Intended to Encourage Investment

Turkey has published secondary legislation, outlining further details for a recent law which significantly loosened stamp tax obligations and notary fees for a range of documents (more). Notable new exemptions include stamp tax no longer being applied to documents regarding share transfers in joint stock or limited liability companies. Furthermore, copies of papers subject to proportional stamp tax are no longer subject to stamp tax.

The General Communique on Stamp Tax Law (Serial No. 60) (“Communique”) was published in Official Gazette number 29842 on 29 September 2016. The Communique introduces further details for the Law Amending Certain Laws for the Purpose of Improvement of the Investment Environment, Law No: 6728, published in Official Gazette number 29796 on 9 August 2016.

Significant changes introduced by the Law and Communique include:

– Stamp tax will not apply to share transfer documents for joint stock companies, limited liability companies or mutual funds.

– If stamp tax which is collected over the maximum amount has already been paid for a contract and changes are made to a contract’s price, stamp tax will not apply again for the increased amount. However, stamp tax must be paid again if changes relate to the contract’s articles about the job.

– Copies of papers subject to proportional stamp tax are no longer subject to stamp tax.

– If a contract includes more than one guarantee and guarantee commitment, proportional stamp tax will apply only once per contract and per guarantee and guarantee commitment, regardless of the number of ordinary guarantees and guarantee commitments within the document.

– In certain circumstances, parties can request stamp tax be refunded if a public tender is completely or partially cancelled. However, stamp tax will not be refunded if the tender contract was concluded, even if the work subject to tender is cancelled after executing the contract.

– Stamp tax will not apply to guarantee or warranty annotations in rental agreements which are exempt from the stamp tax.

– Stamp tax will not apply to one-off payment contracts between payment service providers and payment service users, made under the Law on Payment Services and Electronic Currency Institutions.

– Stamp tax will not apply to financial lease contracts and documents related to assignment or amendment of these contracts. It will also no longer apply to supply contracts on financial leases concluded between suppliers and lessees, nor to documents including their guarantee.

– Stamp tax will not apply for any undertaking related to an agreement by way of sanction, such as “down payment, forfeit penalty, deduction from wage, contractual penalty clause”, unless it is the subject of a separate agreement.

Please see this link for full text of the Communique (only available in Turkish).

Read More
Turkey Introduces Detailed Legislative Regime to Encourage Large-Scale Renewable Energy Investment

Turkey’s Ministry of Energy and Natural Resources has introduced details for operation, investments and licence procedures regarding large-scale renewable energy resource areas (“Investment Areas”). Investment Areas can be located on public or private property and are intended to promote efficient use of renewable energy resources. The concept was introduced into legislation in 2005, but not widely adopted. These latest detailed provisions are intended to encourage allocation of Investment Areas to investors, to enable fast utilisation of energy investments, supporting production and/or purchase of high-tech components in Turkish renewable energy facilities.

The concept of Investment Areas was first introduced under the Law on the Use of Renewable Energy Resources for the Generation of Electrical Energy No. 5346. In March 2016, the Electricity Market Law No. 6446 was amended to introduce a more detailed legal basis for Investment Areas. Subsequently, the Renewable Energy Resource Areas Regulation (“Regulation”) was published in Official Gazette number 29852 on 9 October 2016, entering into effect on the same date. The Regulation outlines detailed rules for operation, investments and licence procedures in Investment Areas.

Determining an Area as an “Investment Area” and Applications

Investment Areas can be developed by either:

– The Renewable Energy General Directorate.

– Third parties, after a tender process by the Renewable Energy General Directorate, allocating capacity to specifically establish an Investment Area.

The Regulation includes detailed tender procedures for allocating capacity to third parties:

– A tender is announced for each type of resource and relevant connection area, including tender specifications for such site.

– Applicants provide their offers for development of an Investment Area in such connection area, in accordance with the tender specifications.

– The tender is conducted via a reverse auction procedure. Therefore, the tender is awarded to the applicant which offers the lowest electricity purchase price per kilowatt-hour, over the government-determined price ceiling. The winning bidder is awarded the right to execute a Usage Right Agreement.

– The applicant must determine the usable power plant stations in the connection area, in accordance with the relevant legislation, then notify the Renewable Energy General Directorate within 90 days.

– If the Renewable Energy General Directorate approves these power plant stations, these are announced in the Official Gazette as being Investment Areas.

– The applicant must complete the prerequisites, licences and approvals for the approved Investment Area, in accordance with the Usage Right Agreement and tender specifications.

Condition to Use or Produce Domestic Goods

The right to continue activities in an Investment Area will only be granted to persons which undertake to produce domestic goods and/or use domestic goods, as specified in the tender specifications for such site.

Applicants must present Domestic Goods Certifications (as stipulated under the relevant legislation), The tender specifications will identify the types of domestic goods required to be used in a specific Investment Area.

Licence Obligations

Successful bidders must obtain an electricity generation pre-licence and licence from the Energy Markets Regulatory Authority.

Applicants must also complete the conditions for production or use of domestic goods, specified under the Usage Right Agreement. If the applicant will produce domestic goods in the Investment Area, it must present documents to the Renewable Energy General Directorate which show completion of the production facility within the pre-licence period.

Sale of Energy Produced in Investment Areas

During the term stipulated in the tender specifications, energy produced in Investment Areas can only be sold to the Renewable Energy Resource Mechanism, for the prices in the Usage Right Agreement. When the purchase term expires, the applicant can begin operating within the free market.

Energy facilities built under a Usage Right Agreement cannot benefit from the domestic goods incentives under the Law on the Use of Renewable Energy Resources for the Generation of Electrical Energy No. 5346.

Please see this link for the full text of the Regulation (only available in Turkish).

Read More
Turkish Banking Regulations Now Allow Credit Agreements to be Restructured More Easily

Turkey has amended classification rules for banks (including foreign branches) which apply when classifying collectible credit groups and other receivables. The changes allow conditions of underlying agreements to be restructured more easily. Agreements can now be changed, provided they continue to meet the relevant credit group classification criteria. Credits and other receivables can be restructured, without changing credit group classifications.

The Amending Regulation Regarding Regulation on Specification of Credits and Other Receivables by Banks and Procedure and Principles of Allowances which will be Reserved for These (“Amendment Regulation”) was published in Official Gazette number 29840 on 27 September 2016.

Notable changes introduced by the Amendment Regulation include:

– The content of the “First Group- Qualified Credits and Other Receivables” is not changed. However, conditions can now be changed in agreements for First Group credits or other receivables, provided the agreements maintain the group conditions.

– In general, credits and other receivables which are likely to be collectable, but due to deferrals or payment date being more than 30 days with a dispensable reason, are classified as “Second Group-Credits and Other Receivables Under Close Monitoring”.

– If a customer has multiple credits from the same bank and any of them are classified in the Second Group and all others in the First Group, all the customer’s credits will now be deemed to be in this Second Group. Provided these credits sustain the conditions of their group, the conditions of agreements for credits and other receivables can be changed.

– The Regulation is revoked which outlines the method of reserving accounts specifically for consumer credits other than housing credits. Under this change, housing credit (such as mortgages) are no longer separated from regular consumer credit.

Please see this link for the full text of Amendment Regulation (only available in Turkish).

Read More
Turkey Introduces Withholding Tax Discount for Entities Providing Services Outside the Country

Turkey has introduced a discount on withholding tax for certain employees working at entities which provide services outside Turkey. From 1 January 2017, qualifying entities will be able to offset the discounted tax rate against income taxes for employees who are exclusively employed in the foreign services and who actually provide the services outside Turkey.

The General Communiqué on the General Income Tax was published in Official Gazette number 29458 on 27 August 2015 (“Communiqué”),defines detailed provisions for the entities providing legal services to abroad, enabling them to benefit from a withholding tax reduction for certain employees. The Communiqué was adopted within the scope of amendments to the Income Tax Law amended by Law numbered 6728 on the Amendments on the Sveral Laws With the Airm of Improving the Investment Environment.

To qualify for the reduced tax rate, entities must be engaged in one of the following activities:

– Architecture, engineering, design, software, medical reporting, keeping accounting records, call center, product testing, certification, data storage, data processing, or data analysis services which are being used exclusively outside Turkey.

– Services being provided on the occupational training areas determined by the Ministry of Finance.

– Education and health services provided under the permission and the supervision of related Ministry.

To qualify for the discounted withholding tax rate, the services must also meet all of the following criteria:

– Be provided outside Turkey

– Be provided to the real persons residing outside of Turkey or to the enterprises having their registered offices outside Turkey.

– Have 85% of the revenue earned from such services must come from outside Turkey.

– Have invoices or other relevant documents issued on behalf of real persons or legal entities residing outside Turkey.

Employees who do not actually work in the activities listed above cannot qualify for the tax reduction, nor can support staff.

Please see this link for the full text of the Communiqué (only available in Turkish).

Read More
Turkish Capital Markets Board Waives Quarterly Fee for Venture Capital Investment Funds Until End of 2020

The Turkish Capital Markets Board has announced that fees for venture capital investment funds under Article 130(3) of the Capital Markets Law will not be collected between the end of 2017 and the end of 2020.

Article 130(3) of the Capital Markets Law requires investment funds to deposit 0.005% of the investment fund’s net asset values into the Capital Markets’ Board’s account within ten working days of the end of each quarter.

However, to encourage the institutional investor environment and collective investment sector, as well as promote venture capital investment funds, the fee percentage (0.005%) will be decreased to 0% between 2017 and the end of 2020.

Please see this link for the Capital Markets Board’s bulletin containing decision numbered 27/874 from 7 October 2016.

Read More
Turkey Reduces Special Consumption Tax for Hybrid Cars

Turkey has introduced a long awaited reduction of special consumption tax on hybrid cars. Tax rates are significantly reduced, depending on the engine capacity and power of the electric motor. The incentive is intended to increase Turkish use and production of cars which have hybrid technology.

Council of Ministers’ Decision (dated 26 September 2016 and numbered 2016/9260) regarding Re-Evaluation of Special Consumption Tax on Certain Goods which are Specified in Annex (II) of the Law on Special Consumption Tax numbered 4760 (“Decision”) was published in Official Gazette number 29848 on 5 October 2016, entering into effect on the same date.

The Decision makes amendments to Annex (II) of the Law on Special Consumption Tax numbered 4760:

The special consumption tax at the rate of 90% is reduced to 45% for the category of cars which have engine capacity between 1600 cm3 and 2000 cm3, with an electric motor power exceeding 50 KW and an engine capacity less than 1800 cm3.

The special consumption tax at the rate of 145% is reduced to 90% for the category of cars which have engine capacity more than 2000 cm3, with an electric motor power exceeding 100 KW and an engine capacity less than 2500 cm3.

Please see this link for the full text of the Council of Ministers’ Decision (only available in Turkish).

Read More
Turkey Introduces Rules to Ensure Electromagnetic Compatibility

Turkey’s Ministry of Industry and Technology has introduced rules for electromagnetic compatibility between electronic devices and fixed wiring installations to ensure electromagnetic compatibility of the devices throughout the market. The new rules apply to all types of electromagnetic devices and fixed installations.

The Regulation on Electromagnetic Conformity (“Regulation”) was published in Official Gazette number 29845 on 2 October 2016, entering into effect on the same date. It was issued in line with a Directive by the European Parliament and the Council on Electromagnetic Compatibility.

Notable provisions introduced by the Regulation include:

– The Ministry must take all the measures to ensure that only compliant equipment is made available on the market or put into service, including proper installation, maintenance and use.

– When launching equipment to the market, manufacturers must ensure it is designed and manufactured in accordance with certain essential requirements (Annex I of the Regulation).

– Importers must ensure they only allow compliant equipment to enter the market.

– Distributors must exercise due care when making equipment available on the market.

– The Ministry can investigate and review compliance with the Regulation if it believes certain equipment presents a risk to public interest.

– If the Ministry discovers non-compliance, the relevant establishments must take all appropriate corrective actions to rectify the failure, withdraw the equipment from the market, or to recall it within a reasonable period (commensurate with the nature of the risk).

– Distributors who know (or should have known) about product incompatibility must take necessary measures to bring the equipment into line with the Regulation, recall the equipment, or remove it from the market if necessary.

The following equipment is excluded from the Regulation:

– Equipment stipulated in the Wireless Telecommunications Terminal Equipment Regulation.

– Aircraft or equipment intended to be fitted into aircraft.

– Wireless equipment used by amateur wireless operators

– Special edition evaluation kits for professionals solely for research and development purposes.

Please see this link for the full text of the Regulation (only available in Turkish).

Read More
Turkey Announces Safety, Labelling and Recall Rules for Electrical Equipment Used Between Certain Voltages

Turkey has introduced regulations for electronic equipment aimed at protecting the safety of people, property and animals. The rules apply to electrical equipment designed for use between 50 and 1,000 Volts for alternating current, and between 75 and 1,500 Volts for continuous current. Rules include minimum standards for market entry, labelling, testing and recall of electronic devices.

Turkey’s Ministry of Industry and Technology (“Ministry”) published the Regulation on Electrical Equipment Designed for Use within Certain Voltage Limits (“Regulation”) in Official Gazette number 29845 on 2 October 2016, entering into effect on the same date.

Notable provisions introduced by the Regulation include:

– To be offered to the market, electronic equipment must be built in line with the best engineering techniques and must not endanger humans, domestic animals or goods provided that they are installed and preserved appropriately and used in the intended manner.

– The Ministry will ensure that electricity suppliers do not request harder safety measures to interconnect and supply energy to the electronical equipment users.

– Producers must execute sample tests of electronical equipment in the market once required, addressing potential risks, make examinations. If necessary, producers must undertake trace and registration activities for complaints about recalled electronic devices (and inform distributors about the complaints).

– Producers must ensure electronic devices carry certain information, or include this information on packaging or documentation (if the equipment’s size or construction prevents the information being added to the device itself). Information must include:

– Type, parcel or serial number or another distinguishing mark.

– Producer’s name.

– Registered trade names.

– Registered trademarks.

– Communications address.

– Instructions and safety information should be provided with electronic devices, in Turkish (or a language understood by consumers and accepted by the Ministry), in the format determined by the Ministry. The information must be clear, comprehensible and readable.

 -Electronic devices must comply with the Regulation in order to be launched to the Turkish market.

– Distributors who know (or should know) about products which fail to meet the Regulation’s standards must take measures to rectify the failure, recall the products, and if necessary, remove them from the market.

The following electrical equipment is excluded from the new rules:

– Equipment designed for explosive atmospheres.

– Equipment for use in radiology and medicine.

– Elevators designed for people or cars.

– Electric meters, sockets and plugs which are designed for domestic use.

– Electrical hedge controllers.

– Radio electrical statics.

– Equipment designed for use in ships, plane or railroads.

– Kits which are manufactured to be used by professionals for research and development services.

Please see this link for the full text of the Regulation (only available in Turkish).

Read More
Turkey Introduces Regulatory Regime for Pyrotechnic Substances

Turkey has introduced regulations for manufacturing, categorizing, distributing and importing pyrotechnic substances. The new rules require pyrotechnic substances meet minimum composition and labeling standards, as well as comply with related European Union and international standards.

The Regulation on Certification, Placing into Market and Audit of the Pyrotechnic Substances (“Regulation”) was published in Official Gazette number 29845 on 2 October 2016, entering into effect on the same date.

Notable aspects of the Regulation include:

– Pyrotechnic substances are classified into three categories, based on their types of use, sound levels and objectives (fireworks, stage and theater, and other). Each category is sub-divided further, pursuant to the hazard level, and an age limit is established for use.

– Pyrotechnic substances are subject to:

– Harmonized EU Standards (or equivalent Harmonized Turkish Standards), and

– Provisions of the CE Marking Regulation, implemented by the Council of Ministers’ Decree number 2011/2588 on 16 December 2011.

– Manufacturers of pyrotechnic substances must:

– Prepare the necessary technical file

– Implement the conformity assessment procedure.

– Organize an EU conformity declaration.

– Affix CE marking to the pyrotechnic substances.

– Manufacturers must label pyrotechnic substances to ensure they are traceable. Labels should include information such as minimum safety distance and availability to use in open air.

– Before placing pyrotechnic substances into the Turkish market, parties (including importers and distributors) must:

– Ensure conformity assessment procedures have been implemented.

– The substance bears the CE marking.

– The substances complies with the Regulation.

– The Ministry of Science, Industry and Technology can appoint impartial legal entities with adequate technical knowledge and experience to assess conformity.

– The Ministry must take all appropriate measures to address threats posed by pyrotechnic substances to the safety of health, property, the environment, or public interest, within this scope of this Regulation.

Please see this link for the full text of the Regulation (only available in Turkish).

Read More
Turkish Constitutional Court: Exception to Investment Allocation Threshold Contradicts National Assembly’s Powers and Public Procurement Legislation

Turkish legislation requires projects in the 2015 Investment Program’s additional investment list, as well as projects which are predicted to extend for more than one year and whose allocation is paid in lump sum, to only begin if the 2015 investment allocation is 10% or more of the project cost. The threshold is intended to prevent government bodies tendering projects without sufficient investment funds and also to reduce the average duration of projects. The Turkish Constitutional Court has recently struck out an exception to this restriction as being unconstitutional because only the National Assembly is authorized to make such an exemption and it contradicts provisions in public procurement legislation.

The exception in Article 9 of the 2015 Centralized Administration Budget Law applies excluded the following projects from the 10% investment allocation requirement:

– Hydroelectric plant and dam projects whose installed capacity is more than 500 MW.

– Project regarding improvement of railway route of Gebze-Haydarpaşa, Sirkeci-Halkalı

– Construction Project of Submerged Tube Tunnel, Rail transportation, Metro and Other Railway Transportation Projects of Ministry of Transport, Maritime Affairs and Communications.

With its recent decision, the Constitutional Court held that the legislative exception contradicted Article 87 and 161 of the Constitution. These provisions outline the Turkish Grand National Assembly’s organization and duties, as well as authority to prepare and implement the budget. According to these provisions, exclusions can only be made by the National Assembly.

The Constitutional Court also noted that the exception contradicts Article 62 of the Public Procurement Law No: 4734. This provision outlines a 10% allocation threshold, intended to prevent projects being tendered without sufficient investment funds and also to reduce the average duration of projects.

Please see this link for full text of the Constitutional Court’s decision 2015/7 and 2016/47, dated 26 May 2016 (only available in Turkish).

Read More