Bringing Export Proceeds into the Country
BRINGING EXPORT PROCEEDS INTO THE COUNTRY
Introduction
As of 2018, fluctuations in foreign exchange rates made it necessary to implement certain economic measures in order to ensure the sustainability of the trade and production sectors. One of the measures adopted within this scope is the practice of bringing export proceeds into the country and documenting them through banks.
With the Communiqué on the Decree No. 32 on the Protection of the Value of Turkish Currency (Regarding Export Proceeds) (Communiqué No: 2018-32/48) published in the Official Gazette dated 4 September 2018, the obligation to bring export proceeds into the country was reintroduced. This Communiqué was amended by Communiqués No. 2019-32/53, 2019-32/55, 2019-32/56, 2020-32/58, and 2021-32/61, while the procedures and principles regarding the implementation were determined by the “Export Circular” of the Central Bank of the Republic of Türkiye.
Period for Bringing Export Proceeds into the Country and Exceptions
As a rule, the proceeds of export transactions carried out by persons and companies resident in Türkiye must be brought into the country immediately and without delay following payment by the importer. Pursuant to the Communiqué and the Circular, with respect to transactions where the actual export was carried out after 4 September 2018:
- The period for bringing export proceeds into the country is a maximum of 180 days from the date of actual export.
- This 180-day period is the maximum duration; export proceeds are expected to be brought into the country without unreasonable delay after being collected.
- If export contracts stipulate a maturity longer than 180 days from the date of actual export for the collection of proceeds, the period for bringing the proceeds into the country is a maximum of 90 days from the end of the maturity period. In this case, the contract, proforma invoice, or bill of exchange evidencing the stipulated maturity must be submitted to the intermediary bank together with the exporter’s written declaration.
Exports made to free zones are also explicitly included within the scope of the Communiqué. Paragraph five of Article 4 of the Circular states that exports to free zones are also subject to the provisions of Communiqué No. 2018-32/48.
On the other hand, for export transactions made to the countries listed in Annex:2 of the Circular, the first paragraph of Article 3 of the Communiqué is not applied; thus, the obligation to bring export proceeds into the country is exempted for exports to these countries.
Relevant Legislation and Time Periods
According to Article 4 of the Export Circular:
“Without prejudice to the export dates and periods specified in Article 7 for special types of exports, it is mandatory that the amount recorded in the customs declaration (CD) of the exported goods be brought into the country within 180 days from the date of actual export and documented under an Export Proceeds Acceptance Certificate (EPAC).”
Exports Against Advance Foreign Currency Payments
For exports against advance payments, pursuant to Article 6 of the Circular:
- Exports against advance payments must, as a rule, be completed within 24 months.
- If there is a force majeure or a justified reason and the exporter proves this with documentation, the bank may grant an additional period of up to 1 year beyond the 24-month period for exports against advance payments.
- If, after receiving advance foreign currency, neither the export is carried out nor the advance foreign currency is refunded within 24 months (and any additional period granted by the bank), the portion of this amount exceeding a certain threshold is deemed a pre-financing loan under the legislation and this situation is reported to the relevant Ministry.
Within this framework, since advance foreign currency has already been brought into the country in advance, the main objective is to fulfill the export commitment corresponding to the advance payment within 24 months.
Concept of Actual Export and Commencement of the Period
Article 151 of the Customs Law No. 4458 defines actual export as follows:
- The exported goods must retain the same condition and characteristics they had at the time of registration of the customs declaration when they exit customs control, and
- The goods must leave the Turkish Customs Territory in this condition, in which case they are deemed to have been actually exported.
- After this stage, customs control over the exported goods ends.
Article 416 of the Customs Regulation defines the date of actual export as:
- For road and rail exits, the date on which exit procedures are completed by the customs authority and the goods physically exit the land border or physically enter a free zone,
- For exits by sea and air, the date on which the vehicle carrying the goods departs,
- For deliveries made to vehicles departing on international voyages, the date on which the goods are delivered.
In parallel, the Circular defines the date of actual export, for foreign exchange monitoring purposes, as the “date of closure of the export declaration” and takes this date as the basis for calculating the 180-day period prescribed for bringing export proceeds into the country.
Bringing Foreign Currency into the Country and Sale to Banks
In order to bring export proceeds into the country, it is not mandatory to immediately convert the proceeds into Turkish lira or sell them to a bank at the moment they are collected.
- At the level of the Communiqué, the former obligation to sell at least 80% of export proceeds to banks and document them under a Foreign Exchange Purchase Certificate (FPC) was abolished by Communiqué No. 2019-32/56.
- However, pursuant to the provisions added to the Circular, it is still mandatory to sell a certain portion of the export proceeds documented under an EPAC or FPC to the Central Bank.
Sanctions to Be Applied in Case of Failure to Bring Export Proceeds into the Country on Time
Sanctions to be applied in case export proceeds are not brought into the country are regulated under Article 3 of Law No. 1567 on the Protection of the Value of Turkish Currency. Accordingly, those who act in violation of the obligations stipulated in the general and regulatory acts issued by the President pursuant to this Law, and those who import or export goods, valuables, services, or capital (or act as intermediaries in such transactions) and fail to bring into the country, within the periods specified in the relevant regulations, the receivables arising from these transactions, shall be subject to an administrative fine equal to 5% of the market value of the asset required to be brought into the country.
In addition, more severe administrative fines are envisaged for cases such as conducting sham transactions with the intent to bring foreign currency or Turkish currency into the country or to smuggle it out in foreign exchange transactions. In the event of repetition of the act, the amount of the fines may be increased, and administrative fines may also be imposed on legal entities.
Pursuant to the aforementioned article, the authority to decide on administrative fines to be imposed within this scope belongs to the public prosecutor.
Legal Remedies Against Administrative Fines
The procedure for applying against administrative fines imposed pursuant to Law No. 1567 due to failure to bring export proceeds into the country is subject to the Misdemeanors Law No. 5326. An application may be filed with the competent criminal court of peace within 15 days from the date of notification against the administrative fine decision rendered by the public prosecutor; this period is a forfeiture period.
Conclusion and Evaluation
The current regulations establish a strict yet foreseeable framework regarding the bringing of export proceeds into the country. Within this framework, transactions must be planned and carried out in compliance with the legislation in force.
Sincerely,
Atabay Law Office