IMPORTANT REGULATION ON UTILIZATION OF FOREIGN EXCHANGE LOANS
The Council of Ministers published a decree amending the Decree No. 32 on the Protection of the Value of the Turkish Currency (“Decree No. 32“) in the Official Gazette dated January 25, 2018 with following amendments providing restrictions on Foreign Exchange loans.
As per the referred restrictions;
a) Turkish resident real person are not entitled to utilize foreign exchange loans or foreign currency denominated loans from Turkey or abroad. However, Turkish resident real persons can utilize Turkish Lira denominated loans from Turkey and abroad;
b) Turkish resident legal entities that do not have foreign exchange income, will no longer be able to utilize foreign currency denominated loans from Turkey and abroad, save for certain exceptions;
c) Turkish resident legal entities that have foreign exchange income will be able to utilize foreign currency denominated loans from Turkey and abroad, by subjecting to the restrictions described in the decree.
Although such new amendments require more detailed explanations by the relevant authority and be clarified with the implementation when in effect, Turkish companies and investors should be aware of that the amendments impose significant restrictions on Turkish residents utilizing foreign exchange loans. Foreign exchange loan borrowers must consider these restrictions when working on their financial planning. As the amendments are targeting to regulate borrowings below USD 15 million, small and medium entities will need to take a closer look at them.
____________________________________________________________________________________________
SIGNIFICANT CHANGES TO TURKISH TAX LEGISLATION
The Law No. 7061 Amending Certain Tax Laws and other Laws (“Law No. 7061″) introducing significant changes to several tax laws was published on December 5, 2017.
Here are the most significant provisions:
- Corporate Income Tax (“CIT”): Pursuant to CIT Law, the CIT which was 20% for corporate taxpayers is increased to 22% for fiscal years 2018, 2019 and 2020 and the CIT exemption for income generated from the sale of real estate held by corporate taxpayers for more than two years which was 75% is decreased to 50%. However, the CIT exemption rate for the sale of participant shares, founders’ shares, dividend shares and preemption rights, remains at 75%. Moreover, the CIT exemptions applied to the incomes of banks, financial leasing and financing companies within the scope of this provision were amended and also changes on other many exemption rates were projected.
- Value Added Tax (“VAT”): As per the amendments; VAT arising from services provided electronically by those without a residence, workplace, headquarters or business center in Turkey to individuals who are not VAT taxpayers must be declared and paid by the service providers. According to the relevant changes, the transfer of real estate and participation shares acquired by financial leasing and financial companies through their receivables shall be exempted from VAT.
- Special Communication Tax: According to the amendment to Article 39 of the Expenditure Taxes Law, the special communication tax rate for all establishments, takeovers, transfers and communication services within the scope of mobile electronic communication management of all kinds, for services relating to the transmission of radio and television broadcasts over satellite and cable platforms, for the provision of wired, wireless or mobile internet services are decreased to 7.5%.
- Stamp Tax: A stamp tax exemption is now applicable to papers drawn up by special purpose vehicles incorporated to supply funds in return for securities issued abroad to finance public–private partnership projects and to supply funds to project manager companies, as well as to papers related to their repayments and warranties.
- Law on the Collection Procedure of Public Receivables: As of 1 January 2018, the deadline for filing a lawsuit against payment orders is increased to 15 days from 7 days.
_______________________________________________________________________________________
NEW REGULATION ON TRACK OF GOODS IN CUSTOM
The Turkish Ministry of Customs and Trade has launched the GET-APP Program in consequence of problems arising from keeping tracks of goods in custom for years. By virtue of this application, importers and exporters can obtain accurate and prompt information about the transactions they carry out during their customs operations such as the place where the exported or imported goods are located, which transactions are completed, which transactions are pending and how much time such transactions have taken or will take by applying and providing the required information via link below on the GET-APP Program.
_______________________________________________________________________________________
GUIDELINES ON PERSONAL DATA SECURITY IS PUBLISHED
The Data Protection Authority (the “Authority”) published the Guidelines on Personal Data Security (the “Guidelines“) on their website on January 19, 2018. The Authority is responsible for taking all kinds of technical and administrative security measures to prevent processing of and access to personal data unlawfully. Accordingly, the Authority published the Guidelines in order to guide data controllers:
Administrative Security Measures: Data controller companies should take administrative measures such as preparation of personal data security policies, keeping personal data for only archiving purposes, providing employees with trainings to raise awareness on personal data protection issues, recommending contracts executed with data processors, preparation of personal data processing inventory and personal data retention and deletion policy.
Technical Security Measures: Data controller companies should take technical measures such as implementation of cyber security measures, providing security of recording mediums, personal data backups, evaluating security measures taken by cloud service providers prior to procuring cloud service.
The Guidelines are not legally binding and are supplementary to the Data Protection Law; therefore, the Guidelines do not impose any sanctions. It is, however, important for data controllers to adhere to the Guidelines and ensure the security measures stated in the Guideline.
You can find the relevant guide in the following link:
http://www.kvkk.gov.tr/yayinlar/veri_guvenligi_rehberi.pdf
________________________________________________________________________________________
THRESHOLD FOR CONSUMER COURTS IS RAISED
Pursuant to “Communiqué on Raising the Monetary Limits Set Forth in Article 68 of Law No. 6502 on the Protection of Consumers and Article 6 of the Consumer Arbitral Tribunals Regulation”, monetary limit for consumer complaints against sellers and manufacturers brought in Turkish consumer courts is determined as TRY 6,860 (approximately USD 1,832). Consumer complaints below this threshold must be submitted to consumer arbitral tribunals.
_______________________________________________________________________________
REGULATION ON DATA CONTROLLERS REGISTRY IS PUBLISHED
The Regulation on Data Controllers Registry (the “Regulation”), prepared by the Data Protection Authority, is entered into force on January 1, 2018. The Regulation establishes the obligation to register as open to public access with the Data Controllers Registry (the “Registry”). With the new regulation, all data controllers must register with the Registry (the Data Controllers Registry Information System/Tr. VERBIS), prior to initiating activities that involve processing of personal data and must prepare and implement a personal data processing inventory and personal data retention and deletion policy, constituting the basis of the submitted information to VERBIS. Resident and non-resident data controllers in Turkey must assign a contact person/data controller representative. Noncompliance with the registration and notice requirements with the Registry may result in an administrative fine from TRY 20,000 to TRY 1,000,000.
________________________________________________________________________________________
CROWDFUNDING IS NOW REGULATED
The changes to the Capital Markets Law No. 6362 (the “Law“) to regulate crowdfunding within the capital markets laws were published in the Official Gazette dated December 5, 2017. Crowdfunding is defined in the Law as collecting funds from the public through crowdfunding platforms to fund a project or a company. As per the amendment, the activities falling within this definition are not considered a public offering and those who collect funds through crowdfunding platforms are not considered issuers. With this regulation, crowdfunding platforms that are licensed by the Capital Market Board (“Board“) the will be entitled to collect funds without preparing any offering circulars or issuance certificates. The Board will determine the rules and procedures and with this implementation, crowdfunding platforms will provide entrepreneurs and investors with a new and structured investment environment wherein fundraising is more accessible, less bureaucratic and considerably faster.