On 6 March 2025, the Turkish government amended the application of the Decree No. 32, which limits the pricing and payment of certain goods and services in foreign currency for the purposes of protecting the value of the Turkish Lira. One of the amendments is a welcomed relaxation of the limitations on private parties’ intention to contract in foreign currencies, while both is expected to significantly impact contractual payment obligations in Türkiye moving forward.

Limitation on Contracting in Foreign Currency Lifted for Certain Sales Contracts

The first amendment is concerning sales contracts of moveable assets except for transport vehicles. Under the previous application Turkish residents/entities were permitted to determine the contract price and other payment obligations arising from these contracts in foreign currency or indexed to foreign currency but in a very limited number of circumstances. Otherwise, the contract prices and payment obligations arising out of such sales transactions were obligated to be determined in Turkish Liras. The new amendment removes these limitations and frees the parties to choose the Turkish Lira or foreign currency in all sales contracts of moveable assets (except for vehicles).

New Restrictions Imposed on Foreign Currency Use in Certain Public Sector Contracts

Unlike the relaxation of the limitations mentioned above, the second amendment imposes new restrictions on payments in foreign currency under certain contracts. Under the amendment, agreements involving public entities and organizations, as well as certain state affiliated entities in the defence sector, are now subject to stricter currency regulations. Specifically, excluding the contracts for the sale and purchase or rental of real estate, the contract amounts and other related obligations can still be determined in or indexed to foreign currency, however, the payments of the same are no longer permitted to be made or accepted in foreign currency or indexed to foreign currency.

These amendments indicate the Turkish government's effort to foster more dynamism in sales of moveable assets while reinforcing the use of Turkish Lira and tighten financial regulations in the defence sector. Businesses and individuals affected by these changes should review their contractual arrangements and compliance obligations accordingly.

Please do not hesitate to contact us further guidance or assistance on how these changes may impact your transactions.