Edition 72: 6 December 2018
Editorial Team:
Orçun Çetinkaya, LL.M., Ezgi Baklacı, LL.M., and Pelin Oğuzer, LL.M.
Turkey Revises Restrictions on Foreign Currency Agreements

Turkey has announced new rules for its recent restrictions on foreign currency agreements, as well as extended the scope of certain exemptions (more). The latest exemptions mainly apply to sales and rental of real estate or heavy machinery.

According to recent announcements, the following contract types are permitted to be made in a foreign currency, or be indexed to a foreign currency:

– Real estate sale and rental agreements where one of its parties are:

– Non-Turkish citizens who are resident in Turkey.

– Companies located in free zones within the scope of their activities in the free zone.

– Branches, representation offices, offices, or liaison offices in Turkey for persons residing outside Turkey.

– Companies held by persons residing outside Turkey with at least 50% direct or indirect shareholding or that are under joint control of persons residing outside Turkey.

– Real estate rental agreements regarding:

– Accommodation facilities that are certified by the Ministry of Culture and Tourism for operational purposes.

– Duty free shops.

– Sales and rental agreements for heavy machinery.

– Labor agreements executed with seamen.

Agreements made by contractors of state-owned institutions excluding the agreements regarding real estate sales and employment were already exempt from the restrictions, provided these contracts relate to performance of a tender, agreement or international agreement awarded by the state, now real estate rental agreements can also be made in a foreign currency. Contracts to be executed by contractors or third parties contracting with underwriters and contractors under the defined project contracts are now also exempt.

Electronic communication services which either start abroad and end in Turkey, or start in Turkey and end abroad were already exempt from the restrictions. Under the most recent changes, services which start and end abroad are now also exempt from the restriction. The scope of the services has also been extended beyond electronic communication services. Accordingly, contracts regarding services which start and/or end outside Turkey can be made in a foreign currency, or be indexed to a foreign currency.

All types of work/construction agreements can now be made in a foreign currency, or be indexed to a foreign currency, provided that they have foreign currency costs. Previously, the ban applied to all kinds of work/construction agreements (other than construction of ships).

Foreign currency restrictions apply to service and license agreements regarding hardware and software that are developed in Turkey. However, agreements regarding hardware and software which is developed outside Turkey can be made in a foreign currency, or be indexed to a foreign currency.

The contract value for transportation services has been clarified and accordingly can be indexed to fuel-oil prices.

Redetermination of the contract values into Turkish Liras is not required for:

– Vehicle lease contracts and commercial vehicle sales contracts for the purposes of passenger transport and financial leasing agreements regarding real properties and movables executed before 13 September 2018 are exempt from the foreign currency restriction.

– Collected or defaulted debts arising from the agreements falling within the scope of the currency restriction.

– Deposits regarding real property lease agreements

– Securities issued for the execution and enforcement of agreements

The Communiqué Amending the Communiqué regarding Decree Number 32 on The Protection of The Value of Turkish Currency (2018-32/52) was announced in Official Gazette number 30597 on 16 November 2018, entering into force on the same date. Please see this link for the full text (only available in Turkish).

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Turkey’s Capital Markets Boards Amends Disclosure Rules for Material Events

Turkey’s Capital Markets Board has amended its rules for material events to address needs which have arisen in practice. Notably, the obligation to make a public disclosure if shares exceed or fall below certain thresholds has changed, so that the disclosure must now be made by the Central Registry Agency, not the real or legal entity itself.

Notable changes include:

– The obligation to make a direct disclosure if a real or legal entity’s shares in a listed company exceed or fall below certain thresholds has been removed. Previously, a disclosure must be made by the real or legal entity itself at the following thresholds: 5%, 10%, 15%, 20%, 25%, 33%, 50%, 67% or 95%. The necessary disclosures will now only be made by the Central Registry Agency.

– If a real or legal entity exceeds or falls below the thresholds mentioned above either by cooperating on an open or implied, oral or written agreement, or indirectly, or depending on voting rights, the disclosure obligation rests with the related real or legal entity, or the real or legal entity acting together with this real or legal entity.

– The obligation to make a public disclosure within a sixty-day period even if the matter has not been finalized or there has been no development in the matter has now been removed.

Please see this link for full text of the Communiqué No: II-15.1 on Material Events, published in Official Gazette Number 30598 on 17 November 2018 (only available in Turkish).

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Turkey Introduces Rules for the Notification of Transactions to Trade Repositories

Turkey’s Capital Markets Board recently announced new rules for Trade Repositories, including new obligations, activity principles, as well as new rules for membership, operation and audit (more). A new communiqué introduced further new rules for the Notification of Transactions to Trade Repositories on 27 October 2018. 

Notable rules introduced under the new regime include:

– Parties to derivative transactions and institutions acting as central counterparts must notify Trade Repositories about the details of derivatives contracts executed in the stock market, organised markets and over-the-counter markets.

– Parties must notify the Trade Repository on the following working day after:

– Signing the contract.

– Revising the contract.

– Early termination or due execution of the contract.

– For transactions where investment enterprises act as brokerage firms, the Trade Repositories must be notified by the investment enterprise involved.

– Derivatives contracts concluded between real persons and legal entities without interference by intermediary firms must not be notified to Trade Repositories.

– The obligation to notify can be transferred to counterparties of contracts or to other member institutions of Trade Repositories for derivatives contracts concluded between two investment enterprises or legal entities. If one party is an investment enterprise or the investment enterprise acts solely as an intermediary firm during the transaction, the transfer is limited with member institutions of Trade Repositories. The transfer does not release the contracting party from its obligation to notify.

– Parties must value the net worth of contracts relating to their open positions and their margin amount on a daily basis.

– Parties must keep records of notified transactions for ten years after the date of closing the related positions.

– Parties cannot refuse to provide requested information on the basis of legislative confidentiality obligations. However, interruptions due to legal obstacles of foreign legislation are not in the scope of this provision.

– Derivatives contracts concluded after 30 November 2018 must be notified.

Please see this link for full text of the Communiqué on the Notification Principles to Trade Repositories was published in Official Gazette number 30578 on 27 October 2018 (only available in Turkish).

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Turkey Launches Rules for Local Seed Varieties

Turkey has introduced new rules for producing, marketing, on-site maintenance and sustainably using seeds. The new regime aims to prevent genetic erosion for local varieties of field crops, vineyard/garden plants and other plant varieties. The new rules outline procedures and principles for registering local seed varieties, as well as rules for trading, production, launching seeds on the market and audits.

The Regulation on Registration, Production and Marketing of Local Varieties (“Regulation”) was published in Official Gazette number 30570 on 19 October 2018, effective on the same date.

In this context, “local plant varieties” means all clones and population groups of plant varieties that are under the threat of genetic erosion and have either:

– Traditionally grown in a specific geographical region, or

– Adapted to the geographical conditions of the region where they grow.

The Ministry of Agriculture and Forestry (“Ministry”) will establish the Local Variety Registration Committee (“Committee”), which will record local plant varieties in Turkey.  Only seeds registered on the Local Variety Register List can be reproduced and traded.

Registration process

– The following entities can apply to register local plant varieties to the Ministry of Forestry and Agriculture’s provincial directorate in the local variety’s place of origin:

– Professional organizations.

– Non-governmental organizations.

– Public research institutions.

– Local administrations.

– Universities.

– Registration applications cannot be made for:

– Varieties included in the registers published as per the Regulation on Registration of Plant Varieties, or removed from this list within the three years before the application date.

– Varieties whose plant breeders’ rights are protected, or an application has been made for protection under the Law on Protection of Breeders Rights for New Plant Varieties.

– Registration applications which are rejected during the preliminary examination will be notified, including the reasons for the refusal.

– The provincial directorate will send registration applications which pass the preliminary examination stage to the Directorate of Seed Registration and Certification, which will then forward them to the Committee.

– The Local Variety Register List includes the:

– Region of origin.

– Applicant name.

– Who will maintain the variety.

– Third parties can oppose new registrations within 30 days of them being announced in the Local Variety Register List.

Seed production

– Seeds of local varieties registered for a particular region of origin can only be produced in that region. When this is not possible due to negative production conditions or other environmental problems, seeds can be produced outside the region of origin with the Committee’s consent.

– The Ministry sets caps for the annual total amount of seeds produced for each variety, considering the variety’s certified production amount.

Labelling and marketing

– Packaging of packaged seeds or the labels of non-packaged bundles of production materials must:

– State “This is a local variety”, and/or

– Include a logo designed by the Ministry.

– Labels must state, among other things:

– The producer’s name, address or identifier logo

– Seed type

– Region of origin.

– Seed type name.

– Net or gross weight or number of seeds.

– Structure of additives.

– Ratio of net seed weight to total weight.

– For species subject to plant passport rules, labels must contain the passport’s mandatory information. 


– Seed Inspectors will check compliance of seeds which are produced and marketed in accordance with the Regulation.

– Breaches of the Regulation will be punished with administrative fines of between 3,000 and 25,000 Turkish Liras.

The full text of the Regulation is available at this link (only available in Turkish).

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Turkey Introduces Voluntary Environmental Label Scheme

Turkey has announced a voluntary environmental label scheme, to promote products with reduced environmental impacts, as well as provide consumers with accurate and science-based information.

 The Environmental Label Regulation (“Regulation”) was published in Official Gazette number 30270 on 19 October 2018. To acquire the environmental label, applicants are expected to meet the following criteria:

– Reduce energy consumption, which has a negative impact on climate change and biodiversity, as well as promote use of renewable energy.

– Dispose of waste, emissions and harmful substances related to products or services.

– Replace harmful substances with safer materials or methods, this is technically feasible.

– Minimize the environmental impact of products and services by extending their lifetime, ensuring re-usability, or converting it to another product.

The environmental label will not be given to chemical products which are toxic, environmentally hazardous and carcinogenic.

The following parties can apply for the environmental label:

– Producers.

– Manufacturers.

– Exporters.

– Importers.

– Service providers.

– Wholesalers.

– Retailers.

Applications will be made to the Environment and Urban Planning Ministry (“Ministry”), which will make a technical examination.

The environmental label is valid for four years and can be renewed for further periods on application to the Ministry.

The environmental label cannot be used as an advertisement, expression, label or logo which is incorrect, misleading, or harmful to the environmental label scheme’s integrity.

An annual fee applies for using the environmental label. If the fee remains unpaid, the Ministry can cancel the environmental label.

Criminal sanctions will apply for illegal or improper use of the environmental label.

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

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Turkey Introduces New Rules for Drug Procurement, Tobacco Packaging and Food-related Health Declarations

Turkey has introduced new regulations for procurement of licensed or unlicensed drugs (which are not available in the Turkish market), plain packaging rules for tobacco, as well as a new requirement to obtain permission for food-related health declarations. 

The Law Amending Certain Laws and Decree Laws Regarding Support of Public Health (“Law”) was published in Official Gazette number 7151 on 5 December 2018, entering into effect on the same date. 

Drug procurement scheme extended 

Previously, only the Turkish Pharmacists’ Association (“TPA”) could procure unlicensed drugs, or licensed drugs which were not available in Turkey, from abroad. The Law extends this power to the Social Security Institution (“SSI”) and the other authorized institutions (not yet announced).

In 2017, the Ministry of Health decided that the SSI could import these drugs and the Turkish Post General Directorate could carry them directly to patients, or to hospital pharmacies (where the patient is being treated).

The Ministry of Health’s decision was criticized on the basis that the standard post service could not provide the special transport conditions, which most drugs require. Rather, critics argued that to ensure patient safety, drugs should only be provided by pharmacies.

Accordingly, the Law establishes a legal basis for the Ministry of Health’s 2017 decision. It enables unlicensed or licensed drugs which cannot be found in the Turkish market to be procured by the SSI, TPA or other institutions/organizations which the Ministry of Health deems appropriate. The drugs must be procured for personal use.

It is expected the other institutions/organizations will be in line with related legislation, such as the:

– Pharmaceuticals and Medical Preparations Law, and

– Regulation on Human Medicinal Products Licensing.

Permission/license owners for these drugs must apply for a license within three years of entering the foreign drugs list, then obtain a license within two years of the application. If they fail to make a license application (or a license cannot be obtained), the President can decide whether procurement of these drugs can continue or not.

Plain packaging for tobacco products 

The Law states that tobacco products must be sold in a standardized plain packaging, preventing advertisement, promotion and sponsorship.

The amendments include:

– The packaging area dedicated to written and illustrated warnings are increased from 65% to 85%.

– All tobacco products must be sold in unified packaging in terms of:

– Font.

– Font size.

– Trademark position.

– Packaging colour.

– Any other text or shape.

– Signs such as logos are not permitted on the package.

– Tobacco products must be sold in closed cabinets, to prevent people reaching or seeing them.

– The Ministry of Agriculture and Forestry will prepare detailed regulations regarding the above issues, taking the opinion of the Ministry of Health.

– All tobacco products manufactured or imported prior to 5 December 2018 must be bought in line with the Law within seven months. The Ministry of Agriculture and Forestry can extend this period for a further six months.

It is expected that standardized packaging (which already exists in Australia, UK, Ireland, Norway and Hungary) will raise discussions about protection of industrial and intellectual property rights. Lawsuits filed by the large tobacco companies against the Australian government and related arbitration process have been on the international agenda for a long time. 

Food advertising and supplements 

The Pharmaceutical and Medical Device Authority’s approval is now required for health declarations used on food and food supplement labels, or in promotions and advertisements.

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

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Turkey Adopts International Standard Financial Reporting from 2020

For accounting periods beginning 1 January 2020 onwards, Turkey will apply the Conceptual Framework for Financial Reporting (“New Framework”) as revised by the International Accounting Standards Board. Changes apply to measurement, presentation and disclosure, as well as recognition and derecognition. The New Framework also clarifies issues such as prudence, the managing body’s management responsibilities, as well as measurement uncertainty. The New Framework can be applied before January 2020, at each entity’s discretion.

The Public Oversight, Accounting and Auditing Standards Authority announced the decision, which ensures Turkey complies with international accounting standards.

The New Framework addresses the following topics:

– The purpose of general purpose financial reporting.

– Qualitative characteristics of useful financial information.

– Financial statements and reporting entity.

– Elements of financial statements.

– Recognition and derecognition.

– Measurement.

– Presentation and disclosure.

– Concepts of capital and protection of capital.


The current Conceptual Framework includes little guidance on measurement. The New Framework describes in detail which information measurement bases provide, as well as explains the factors to consider when selecting a measurement basis (relevance, faithful representation and cost constraint).

The New Framework clarifies that when selecting a measurement basis, entities must consider the nature of the information in both the statement of financial position and the statement(s) of financial performance. The relative importance of each factor depends upon the facts and circumstances in each individual case.

Recognition criteria

Under the current Conceptual Framework, entities must recognise an item if:

– It meets the definition of an element,

– It is probable that economic benefits would flow to the entity, and

– The item had a cost or value that could be reliably determined.

The New Framework clarifies these, referring explicitly to the qualitative characteristics of useful information, using the criteria:

– Relevance.

– Faithful representation.

Presentation and disclosure 

The New Framework includes a chapter regarding presentation and disclosure. Effective communication of information in financial statements makes that information more relevant and ensures a faithful representation of an entity’s assets, liabilities, equity, income and expenses.

The New Framework includes concepts that describe how information should be presented and disclosed in financial statements.

Financial statements and the reporting entity

The New Framework includes a chapter regarding financial statements and the reporting entity. Determining the appropriate boundary of a reporting entity can be difficult. For example, if the entity is not a legal entity. In such cases, the boundary is determined by considering the information requirements of users of the entity’s financial statements. Those users need information which is relevant and faithfully represents what it purports to represent. A reporting entity does not comprise an arbitrary or incomplete collection of assets, liabilities, equity, income and expenses.

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

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