STAMP TAX DUTY FOR THE CONTRACTS IMPACTED BY CURRENCY PROTECTION LAW
The prohibition of determining the contract price in foreign currency or based on foreign currency is imposed for many contracts (namely, chattel and real estate sales and leasing, financial leasing, labour, service and construction agreements) that are concluded between the Turkish residents, with 13/9/2018 dated and 85 numbered “the Decree on the Amendment of 32 numbered Decree regarding the Protection of Turkish Currency” (“Presidential Decree”). Under this new regulation, the necessary of amendment of the contract price converted into Turkish currency is needed for the contracts in the scope of the prohibition. At this point, a stamp tax problem occurs for the amended contracts.
Yet, the new contracts in Turkish currency and amendments shall be subject to a stamp tax with the rate of %9,48 according to the Article 14 of the Stamp Tax Law which states “the increasing amount shall be subject to tax to the same extent in case of any amendment in contracts that contain some amount of money”. If the mentioned stamp tax is not paid, these new contracts shall be subject to penalties since they will be contrary to the Stamp Tax Law.
The Revenue Administration published a Circular with the date of 22.11.2018 regarding the problems occurred in the practice when 85 numbered Presidential Decree and Stamp Tax Law are enforced together. You may reach the related Circular via this link.
According to the Circular, the stamp tax will not impose additionally in case the contracts or amendments in foreign currency which are concluded again in Turkish currency, carry some provisions. These provisions are states as follows in the Circular:
- Amending the contract price without making any amendment on the other provisions of the contract (such as parties, duration, additional work etc.),
- Setting the total price to be determined in Turkish currency, lower than the amount that is found by multiplication of the amount in foreign currency in the first contract and the current exchange rate announced by the Central Bank of Turkish Republic on the drafting date of the amendment paper,
- Making a reference to the first contract. If there shall be no reference in the addendum to be signed, the addendum shall be subject to the stamp tax on total amount.
Yet, no stamp tax shall be imposed on the addendum due to the increased amount if the abovementioned provisions are held and the stamp tax is paid on maximum amount for the contracts drafted in foreign currency.
Besides, if the new contract/amendment to be drafted involves a higher amount of contract price comparing with the amount calculated in accordance with the selling rate of exchange of Central Bank on the drafting date, without making any alteration on the contract in foreign currency, the stamp tax will be imposed on the increased amount with the provision of not paying the stamp tax in the first contract on the maximum amount.