Category: Turkiye

Former CicekSepeti.com / Lolaflora.com Chief Legal Counsel Dilek Akdas Kokenek has joined Moral, Kinikoglu, Pamukkale, Kokenek as Partner and Head of the IT & C department.

According to the firm, Kokenek focuses on “e-commerce as well as data protection-related matters under IT Law.”

Before joining the firm, Kokenek spent a year and a half at CicekSepeti.com / Lolaflora.com. Prior to that, she spent over eight and a half years with n11.com as Chief Legal Counsel. Earlier still, she spent over two years as a Senior Associate with GSI Meridian Attorneys at Law, between 2010 and 2012, and almost three years with Poroy & Ozulku as an Associate.

“For the last 10 years, I have been working for leading e-commerce companies as a lawyer and actively played a role in the e-commerce environment, where digital technologies and law are the key considerations for business success and digital transformation,” Kokenek commented. “It has been an honor to be one of the legal professionals who have been designing the e-commerce law atmosphere in Turkey and I will carry that knowledge and experience with me into the next phase of my career. Many thanks to my in-house legal affairs teams and friends in the e-commerce habitat and my family for their support. I cannot wait to embark on this journey with this amazing team!!!”

Originally reported by CEE In-House Matters.

Former Global Kapital Group Company Secretary Pinar Tuzun has joined HSBC as its Company Secretary in Turkey.

Before her move, Tuzun had spent almost two years with Global Kapital Group as its Company Secretary and Senior Legal Counsel. Prior to moving in-house, she was an Associate with Paksoy between 2012 and 2020.

“I am thrilled about my new role at HSBC Turkey,” Tuzun commented. “This is a great opportunity to meet new challenges as a professional with a legal background and a pleasure to work with a valuable management team at one of the world’s biggest financial institutions.”

Originally reported by CEE In-House Matters.

Paksoy has advised OLX Group’s Letgo Otoplus on its acquisition of a 25% stake in Pilot Garage from its founders, the Emre family. Yonet Attorneys at Law reportedly advised the sellers. 

Letgo Otoplus operates in used car trading. The OLX Group is a Dutch-based online marketplace headquartered in Amsterdam.

Pilot Garage is a car inspection company operating approximately 300 service locations across Turkey.

Paksoy’s team included Partner Elvan Aziz, Counsel Serdar Ildirar, and Associate Melis Azman.

Editor’s Note: After this article was published, Yonet Attorneys at Law confirmed it had advised the sellers. The firm’s team included Attorneys at Law Cengiz Yonet and Melih Yonet.

The Turkish Law No. 6563 on the Regulation of Electronic Commerce (“E-Commerce Law”) adopted in 2014, basically regulates the responsibilities of e-commerce service providers (“Service Provider”) and e-commerce intermediary service providers (“Intermediary Service Provider”), the contracts made over electronic communication tools and their obligations to provide information based on electronic commerce, and the sanctions that can be applied. The E-Commerce Law also aims to provide an environment of trust in the electronic commerce market, protect personal data, the confidentiality of communication, and protect consumers in their transactions in the electronic commerce Marketplaces (“Marketplace”).

With the effect of the COVID-19 pandemic, the e-commerce market, which has grown at a record level, needs to be reorganized according to the needs of today’s world. In this direction, the draft regulation prepared by the Ministry of Commerce (“Ministry”) was accepted in the parliament with minor changes and was published in the Official Gazette on 07.07.2022.

We would like to briefly explain the main issues that are subject to the regulation below:

Responsibility of the Electronic Commerce Intermediary Service Provider for Illegal Content in the Electronic Marketplace

Since it remained unclear in the previous version of the law, this new regulation clarifies the problem of “illegal content”, which is generally obscured by the terms of the contract between Intermediary Service Providers and Service Providers.

With this new regulation, it is stipulated that the Intermediary Service Providers are not responsible for the illegal matters regarding the goods and services offered to the Marketplace by the Service Provider. However, along with this irresponsibility, there are also some obligations imposed on the Intermediary Service Provider. These obligations are as follows:

• Immediately removing the content that is found out to be illegal and informing relevant public institutions and organizations about this situation,
• Regarding intellectual and industrial property, if the right owner claims and complains, removing the content which is subject to the complaint, informing the right owner and if the Service Provider applies with documents showing that the complaint is unfounded, republishing the content.

Broad Supervision Authority of the Ministry of Commerce 

With the new regulation, the Ministry of Commerce is equipped with broad powers in order for the development of electronic commerce and the protection of competition, and is even authorized to determine the mandatory elements to be included in the “Intermediation Agreement” between the Service Provider and the Intermediary Service Provider since the electronic commerce is a constantly developing and changing sector.

Moreover, in addition to the existing “supervision” authority, the Ministry has been authorized to request all kinds of information, documents, books, including those kept in the electronic environment, to receive written and verbal information from the relevant people (especially in cases where there is a need to examine software and algorithms), and to appoint an expert when necessary. In line with this authorization, the Intermediary Service Provider and Service Provider are also obliged to keep all kinds of information, documents, books and electronic records that may be required for this examination for 10 years.

Unfair Practices in Electronic Commerce

With this new regulation, commercial practices of the Intermediary Service Provider that seriously impair the Service Provider’s commercial activities, reduce its ability to make a reasonable decision, force him to take a certain decision or to become a party to a legal transaction are considered as “unfair commercial practices”. In addition to this definition, certain actions have also been clearly specified within the scope of unfair commercial practice. Some of those actions are as follows;

• Restricting the Service Provider’s commercial relations, offering goods and services through alternative channels, or advertising, or forcing it to supply goods or services from anyone,
• Not making the payment to the Service Provider in return for the sale of goods or services within five business days after the order reaches the consumer and the price reaches the Intermediary Service Provider,
• Forcing the Service Provider to sell campaigned goods and services,
• Not drafting the commercial relationship conditions in writing or electronically, and not stocking the contract in an easily accessible way, 

• Receiving the amounts and rates which are not stipulated in the Intermediation Agreement from the Service Provider, 

• Reducing the Service Provider’s rank in the recommendation list or restricting, suspending, terminating the service provided by him, regardless of the objective criteria in the Intermediation Agreement or on the grounds that an application has been made to public institutions or judicial authorities,
• Despite it is not expressly specified in the agreement or the Service Provider does not give consent in writing, using Service Provider’s brand for marketing and promotional activities.

With this legal regulation it is aimed that the Service Provider, which does not have bargaining power against the Intermediary Service Providers, can act of their own free will and not be forced to become a party to the contracts they do not intended.

Obligations of the Intermediary Service Provider

In line with the regulation, some striking and revolutionary obligations have been envisaged for the Intermediary Service Provider, some of which vary according to the amount of the Marketplace’s net transaction volume and number in a calendar year. These obligations are listed below:

Obligations That are Applicable to All Intermediary Service Providers:

• The Intermediary Service Provider may not offer or mediate the sale of its own brands or the brands of the persons with whom it has economic integrity with, in the Marketplaces where it provides intermediary services. This prohibition will not be applied to the goods and services that derive more than half of the total sales revenue from sales other than electronic commerce. *

Obligations of Intermediary Service Providers whose Net Transaction Volume in a Calendar Year Exceeds TRY Ten Billion:

• The data obtained from the Service Provider and the buyer will only be used for the intermediation service, and will not be used while competing with the Service Providers in the Marketplace where the intermediation service is offered or in any other electronic environment.
• Access will not be provided between their electronic commerce environments and Marketplaces which are owned by the Intermediary Service Provider and each other will not be promoted in these environments.
• Technical opportunities will be provided for the free transfer of the data obtained by the Service Provider through hand-sales and access to these data.
• A report containing the procedures for the detection of illegal issues regarding the content provided by the Service Provider and the violations detected will be sent to the Ministry.
• In case of establishment of a company, acquisition of shares of established companies, and transfer of shares, these transactions will be reported to the Ministry within one month.

Obligations of Intermediary Service Providers whose Net Transaction Volume in a Calendar Year Exceeds TRY Thirty Billion and the number of transactions exceeding one hundred thousand, excluding cancellations and refunds:

• Some financial limits have been set for Intermediary Service Provider in relation to the advertising budget and promotions, rewards, points, coupons, gift certificates and similar opportunities that will be provided to buyers.
• The Service Provider’s commercial relations, offering goods or services at the same or different prices through alternative channels, or advertising shall not be restricted. It shall not be forced to supply goods or services from any person, and any provision that allows this shall not be included in the intermediation agreement.

Obligations of Intermediary Service Providers whose Net Transaction Volume in a Calendar Year Exceeds TRY Sixty Billion and the number of transactions exceeding Ten million, excluding cancellations and refunds:

• The Intermediary Service Provider shall not enable the acceptance of electronic money issued by electronic money institutions which it is in economic integrity.*
• Except for the sales in the electronic commerce marketplaces where it provides intermediary services, its sales as an electronic commerce service provider, and its sales outside of electronic commerce, he shall not be engaged in the activities of goods transportation and postal service provider. *
• In the event that an electronic environment is provided for the publication of goods or service announcements, it shall not be allowed the conclusion of contracts or placing orders for the supply of goods or services in the same environment. In the event that these services are provided in different electronic environments by himself or the persons with whom he is in economic integrity, he shall not provide access between these environments and shall not promote each other.

Obligations of the Service Provider

In line with the regulation, the Service Provider is prohibited from engaging in marketing and promotion activities in online search engines by using the registered trademark of persons with whom it does not have an economic integrity without permission.

License Obligation for Intermediary Service Provider**

In line with the regulation, it is stipulated that Intermediary Service Providers must obtain a license from the Ministry and renew this license every year in order to continue their activities. This obligation is valid for Intermediary Service Providers whose net transaction volume in a calendar year is over 10 billion Turkish Liras and whose number of transactions excluding cancellations and refunds is over one hundred thousand. The license renewal fee will be calculated according to the net transaction volume of the Intermediary Service Provider in a calendar year.

Is There Any Matter in The Regulation Regarding the Protection of Personal Data?

In accordance with the E-Commerce Law currently in force; It has been stated that the service provider and the Intermediary Service Provider are responsible for the storage and security of the personal data they have obtained due to the transactions they have made within the framework of the law. At the same time, although it is regulated with the E-Commerce Law that they cannot transmit personal data to third parties and use them for other purposes without the consent of the person concerned, it is seen that this article regarding the protection of personal data with  this regulation has been removed. As a reason; It has been pointed out that service providers and intermediary service providers within the scope of the E-Commerce Law are also data controllers under the Personal Data Protection Law No. 6698 (“KVKK”). Accordingly, it has been concluded that the provision in the current E-Commerce Law limits the obligations of service providers and intermediary service providers in terms of processing personal data, and it has been deemed appropriate to remove the relevant article from the text of the Law. Moreover;

• In order to ensure auditability of intermediary service providers and service providers and to ensure effectiveness in this audit, an obligation has been introduced to keep the information, documents, ledgers, and electronic records of their business and transactions within the scope of the Law for ten years from the date of the work or transaction.
• It is seen that there are frequent problems in the detection of commercial electronic message senders in the process of finalizing commercial electronic message complaint applications. It is regulated that the Ministry of Commerce has authorized to obtain the information from the Information Technologies and Communication Authority of the natural person or legal person makes voice call or sends short message in order to finalize the complaints much more easily and quickly.

Service providers and intermediary service providers are obliged to take all necessary technical and administrative measures to prevent the unlawful processing of personal data, to prevent unlawful access to personal data, to ensure the preservation of personal data, and to ensure the appropriate level of security.

In addition, they must fulfill the obligations of clarification and explicit consent regulated in the KVKK, inform about cookies and obtain the necessary permissions, and fulfill the obligations of registration in the registry of data controllers, if necessary.

As a result, the provisions on the protection of personal data in the unrevised version E-Commerce Law text were restrictive. With these changes, it is intended to point out that the service providers and intermediary service providers who access the data of real persons through electronic commerce are actually data controllers who must act in full compliance with the KVKK.

Administrative Fines

In order to ensure compliance with the new regulations that will come into force, severe administrative sanctions are envisaged by the legislator regarding the violation of these regulations. In this direction, the main administrative fines to be applied are as follows:

• Regarding unfair commercial practices, an administrative fine of TRY 10.000 to TRY 100.000 is imposed on the Intermediary Service Provider for each Service Provider exposed to unfair commercial practices, 

• An administrative fine of TRY 500.000 to the Intermediary Service Provider for each Service Provider who is forced to change the sales price unilaterally or to sell campaigned goods or services;
• An administrative fine of TRY 10.000.000 to the Intermediary Service Provider, which provides access between its own electronic commerce environments and promotes each other in these environments, and also an administrative fine of TRY 20.000.000 to the Intermediary Service Provider, who provides an electronic environment for the publication of advertisements for goods or services, enabling the conclusion of contracts or placing orders for the supply of goods or services in the same environment,
• A fine of 2 times the amount of the previous administrative fine in a case that the violation is not remedied within 1 year despite the implementation of the said administrative fines, or if the same violation is repeated,
• An administrative fine of ten times the aforementioned fines, in case these acts are carried out with works and transactions aimed at misleading the Ministry of Commerce,

Various severe administrative sanctions are envisaged for other illegal transactions of the Intermediary Service Provider, with varying amounts and calculation methods.

When Will It Take Effect?

The amendments in the relevant regulation will enter into force as of 01.01.2023 in general, except for the exempted provisions. Moreover; It is envisaged that the intermediation agreements made before the effective date of the regulation should also be brought into compliance with the regulation within 6 months, otherwise the provisions that are not made into compliance will become null and void.

(* It will enter into force as of 01.01.2024.)

(** It will start to be fulfilled as of 01.01.2025.)

Conclusion

It is seen that the purpose of these regulations introduced for Marketplaces which have completely changed consumer habits and retail trade is to protect the competitive environment and Service Providers lacking negotiation power. With the opinion that the regulations brought by the amendments are fundamental and the sanctions for the violations are heavy, the legislator is giving time for Intermediary Service Providers in order to make them ensure the necessary operational adaptation and help them gain time by making the regulations come into force much later than the date of publication.

By Onur Kucuk, Managing Partner, Alperen Kocalan, Associate, and Melodi Ozer, Associate, KP Law

Guleryuz Partners has advised Haver Farma Ilac on its full acquisition of MS Pharma SARL’s Turkish subsidiary, MS Pharma Ilac. PwC Legal reportedly advised the seller.

Haver Farma provides services and products to public and private hospitals in the health sector. Its portfolio includes products used in oncology, cardiology, general surgery, internal medicine, and other therapeutic areas, as well as vitamins and supplements. 

MS Pharma is a multinational pharmaceutical company headquartered in Amman, Jordan, with its management office in Switzerland. It specializes in the development, production, and distribution of generic and specialty medicines.

Guleryuz Partners’ team was led by Partner Zahide Altunbas Sancak.

Turkish lawyer Onur Sumer has joined Ericsson in Stockholm as the company’s Group Legal Counsel Privacy.

Sumer joins the company from Herguner Bilgen Ozeke Attorney Partnership where he was a Senior Associate between April 2019 and June 2022. This is his second in-house role after working for Turkcell between 2016 and 2019 – first joining the company as a Senior Regulatory Legal Counsel and then being appointed to Senior Legal Counsel, Data Privacy in 2018.

Earlier still, Sumer was an Associate with Gun + Partners between 2010 and 2014 with his experience including working for Cerrahoglu Law Firm, Akalp Law Firm, and Turkoglu Law Firm.

Originally reported by CEE In-House Matters.

Sustainability has been defined by the United Nations as “meeting the needs of the present without compromising the ability of future generations to meet their own needs” and, in a corporate context, it refers to a company’s overall approach to managing a wide range of environmental, social, and governance risks and issues. Sustainability and ESG are increasingly becoming part of companies’ board agenda, understood by companies through a regulatory, compliance, and risk management lens, and seen as inextricably linked with a green light to operate. Companies engage in ESG not only to “do good,” but also due to a growing recognition that taking a robust approach to managing these issues can mitigate risk and provide benefits such as enhanced consumer trust and loyalty, ability to attract talent, ability to meet stakeholder expectations and improve the company’s resilience, and profitability over the long term.

Investing based on ESG principles is becoming very popular since they help investors prevent losses by eliminating companies that engage in risky or unethical practices that would likely cause investors to be held accountable. The criteria are also becoming crucial in the modern world as the negative effects of climate change, the necessity of managing environmental risks, and the increasing importance attached to human rights and ethical values are the most important issues lately.

In this respect, the 2030 Agenda for Sustainable Development, adopted by all members of the United Nations in 2015, provides a plan for peace and prosperity for all people and the planet by submitting 17 sustainable development goals (SDG) that are an urgent call to action by all developed and developing countries. Accordingly, many companies take SDGs into account when creating their ESG principles. Turkey, as a developing country, submitted its nationally determined contributions in relation to the Paris Agreement on October 11, 2021, in which greenhouse gas emissions are envisaged to be reduced by up to 21% by 2030. It is important to note that the EU’s commitment is to reduce emissions by at least 40% by 2030.

While developed countries made considerable progress in environmental accounting and environmental reporting, developing countries such as Turkey are still at an early stage. One of the main reasons for this is that, while sustainability reporting is compulsory in many countries, it is not mandatory in developing countries yet.

Having said that, ESG has started to play a more important role in Turkey since October 1, 2020, as the Capital Markets Board (CMB) amended the Corporate Governance Communique to ensure that public companies adopt the idea of sustainability and report their sustainability performance. With this regulation, the CMB also provided the Sustainability Principles Compliance Framework, which introduces the ESG principles. However, those principles are not compulsory for listed companies. They are, however, required to report the justification for their non-compliance with the principles and the effects thereof. Even if the principles are operated on a comply-or-explain basis, for the time being, this development is an important step for sustainability studies for Turkey and it certainly attracts investors who take ESG principles into account when selecting their investments. Furthermore, ESG principles are also one of the key consideration points in the country’s Eleventh Development Plan (for the years 2019-2023).

In Turkey, it has been observed that many companies with foreign investments have certain business code of conduct practices in which ESG criteria are sought in their business with their stakeholders. These codes of conduct are typically aligned with the SDGs and seek to provide guidance to local companies and third-party suppliers. Companies in Turkey increasingly view diversity and inclusion as a business imperative that fosters innovation and competitiveness and are working to achieve inclusive workplaces and diversity in the boardroom, as well as supporting the wider community in combatting inequality, in pursuit of the SDGs.

All in all, for ESG efforts to work, aligned development needs to take place all around the world. Turkey needs to develop actions in line with international standards and further include those actions in the country’s development plans. As for companies, they should prepare and improve their standards for a better, fairer, and more sustainable future and constantly follow up on developments in ESG.

Nigar Gokmen, Head of Energy, Mining, and Infrastructure, and Tugay Hanegelioglu, Associate, Esin Attorney Partnership

This Article was originally published in Issue 9.7 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Due to the rapidly growing real estate sector, the lawmaker specifically regulates contractual relationships between the parties in order to prevent any loss of right of any one of the parties. Along with the typical real estate sales agreements, preliminary sales agreements are also needed by the sellers and buyers due to many reasons (such as planning a budget for construction, speeding up the period of the construction etc.).

Under Turkish law, it is possible to execute preliminary sales agreements. Real estate presale agreements and prepaid residence sales agreements are widely used especially in the sales of real estate which are still under construction. This article briefly explains the essential terms and conditions of these agreements under Turkish law and the difference between them.

I. Real Estate Presale Agreement

According to Article 29 of the Turkish Code of Obligations No. 6098 (“TCO”), it is possible to execute a preliminary agreement promising that a sales agreement will be concluded at a later date. In this respect, sellers who wish to carry out the transactions for the transfer of the title deed at a later date or who are able to transfer the title deed only at a later date can conclude a preliminary agreement for the sale of the real estate.

A real estate presale agreement is a preliminary agreement under which the seller and the buyer undertake to conclude a real estate sales agreement and transfer the title deed at a later date, under certain terms and conditions determined under the agreement. By executing a real estate presale agreement, the buyer promises to pay the sales price and the seller promises to sell and transfer the ownership of the real estate. In case where one of the parties fails comply with provisions stated in the agreement, the other party may claim for damages or request the competent court to render a ruling having the force of the real estate sales agreement.

According to the Article 237 of the TCO, in order for the real estate presale agreement to be valid and enforceable, the real estate presale agreement shall be executed in presence of a notary public. The real estate presale agreement which will be concluded in presence of a notary must include the following information and documents: (i) information with regards to the title deed, (ii) documents regarding the fair market value, (iii) certificate of the contractor if the seller is a contractor and (iv) photographs of the both parties. In the real estate presale agreement, the seller and buyer, the real estate, the sale price of the real estate subject to the promise of sale, the main obligations and the secondary obligations must be indicated. A real estate presale agreement can be recorded at the land registry. Once recorded, the rights arising out of the agreement can be asserted against subsequent owners and rights holders.

In line with the information given above, the real estate presale agreement can only be concluded for the real estates which are registered to the title deed. Since the performance of the agreement is not possible to the lack of registration before the land registry, the real estate presale agreement subject to the real estate which is not registered before the land registry is not valid (Decision of 14^th Civil Chamber of Court of Cassation, dated 13.03.2018 and numbered 2017/5812 E. and 2018/1889 K., Decision of 14^th Civil Chamber of Court of Cassation, dated 19.09.2019 and numbered 2016/14042 E. and 2019/5570 K.).

II. Prepaid Residence Sales Agreement

Prepaid residence sales agreements are executed between the seller who acts for commercial and professional purposes and the costumer for the purpose of transfer of the real estate. By executing the prepaid residence sales agreement, the buyer accepts the obligation to transfer the title deed of the residence to the customer and the customers accepts to pay a part of the sale price to the residence before the transfer of the title deed.

Prepaid residence sales agreement is regulated under Consumer Protection Law No. 6502 (“CPL”). Article 40 of the CPL defines the prepaid residence sales agreement as follows: “A prepaid residence sales agreement is an agreement where the consumer undertakes to pre-pay the sale price of the real estate in cash or in installments for purposes of housing, and where the seller undertakes to transfer or deliver the real estate to the consumer following the full or partial payment of such sale price.”

In addition to the above, as per Article 40 of the CPL, the seller is obliged to give a preliminary information form which included information determined by the Ministry of Customs and Trade, at least one day prior to the establishment of the agreement. Article 5 of the Regulation of the Prepaid Residence Sales (“Regulation”) states that this form must be in written form and the text shall be at least 12 point-font, clean, explicit and legible. Also, same article lists the information which must be included in the form. For example; name of the seller, the delivery date of the residence, the date of building permit etc. It is important to note that the residence must be delivered to the customer before the delivery date which is determined by the seller. According to Article 40 of the CPL, the maximum transfer or delivery period of the residence is 48 months beginning from the date of the agreement.

According to Article 41 of the CPL and Article 6 of the Regulation, the prepaid residence sales agreements can be executed in a written form with registration of the agreement before the land registry or can be issues and executed before the public notary. Without the building permit, the prepaid residence sales agreement cannot be concluded. The agreement shall be at least 12 point-font, clean, explicit and legible. Also, Article 7 of the Regulation lists the mandatory content of the prepaid residence sales agreement. Some of the information which must be included in the agreement is as follows: date of the agreement, the sale price of the residence, the prepaid amount, payment schedule, delivery date of the residence, date of the building permit etc.

Lastly, the prepaid residence sales agreements and the preliminary information form must include the right of withdrawal and the right to rescind the agreement. The consumer has the right of withdrawal from a prepaid residence sales agreement within fourteen days without giving any reason or being obliged to pay any penalties. Also, as per the Article 45 of the CPL, the consumer has a right to rescind the agreement within twenty-four months following the date of the agreement without giving any reason.

III. Difference Between Real Estate Presale Agreements and Prepaid Residence Sales Agreements

In light of the above, the main differences between the real estate presale agreement and the prepaid residence sales agreement are as follows:

(i) As explained above, the prepaid residence sale agreement can only be executed between a buyer who is considered as “consumer” under Turkish law and the seller who acts with the professional and commercial purposes.  The consumer intends to buy the residence only for housing purposes. On the other hand, with regards to the purpose of buying and the parties of the agreement, there is no limitation in the real estate presale agreement. In other words, the main differences between the real estate presale agreement and the prepaid residence sales agreement are the parties of the agreement and the purpose of establishing an agreement.

(ii) Prepaid residence sales agreement is subject to the provisions of the CPL. On the other hand, real estate presale agreement is subject to the provisions of the TCO.

(iii) The CPL has specific and mandatory provisions with regards to the delivery date of the residence. As we explained above, the maximum transfer or delivery period of the residence is 48 months beginning from the date of the agreement. On the other hand, TCO does not have a provision which regulates the delivery date of the real estate to the buyer.

(iv) It is not mandatory to provide preliminary information form to the buyer in order to execute a real estate presale agreement. However, as per the CPL, it is mandatory to provide a preliminary information form which includes all the obligatory information to the consumer.

(v) The CPL specifically regulates the consumer’s the right of withdrawal and the right to rescind the agreement. These rights are given to the consumer by law and must be stated in the agreement and preliminary information form. However, this is not required in case of executing a real estate presale agreement.

IV. Conclusion

The real estate presale agreement and the prepaid residence sales agreement are two types of preliminary agreements for the sale of real estate and they are specifically regulated under Turkish law. Parties may decide to execute a real estate presale agreement or a prepaid residence sales agreement based on their terms and conditions by complying with the mandatory provisions of the applicable law.

By Gonenc Gurkaynak, Partner, Ceyda Karaoglan, Counsel, Tugba Uluay, Counsel, and Isil Ertekin, Associate, ELIG Gürkaynak Attorneys-at-Law

A new asset peace regulation entered into force with the article 50 of Law No. 7417 on Certain Amendments to Civil Servants Law and Certain Laws and Statutory Decree No. 375 [the “Law No. 7417”] which was published in the Official Gazette numbered 31887 on 5 July 2022.

The previous regulation regarding asset peace was introduced with the Law No. 7256 and the deadline for taxpayers to benefit from the said regulation was 30 June 2022. Following the repeal of the previous regulation, the asset peace regulation will be re-enforced with the Law No. 7417.

What Does the Asset Peace Mean?

Asset peace was initially implemented in our law with the Tax Peace Law No. 4811, and then new regulations were introduced with the following laws. Accordingly, from 2008 to the present, a total of eight pieces of asset peace legislation came into force together with the recent Law No. 7417.

In a nutshell, asset peace regulation aims registration of unregistered domestic or foreign assets by natural persona and legal entities with certain tax advantages, so as to include those assets within the domestic economy. Especially in times of crisis, it is of great importance to record domestic and foreign resources in order to eliminate the financing gap in the economy.

Scope of the New Asset Peace Regulation

With the Law No. 7417, the asset peace regulation has re-entered into force. Accordingly, the Law brings different rules for (i.) foreign assets subject to notification, (ii.) domestic assets subject to declaration, and (iii.) capital premiums.

It should be emphasized that the taxes paid regarding the notification/declaration of assets cannot be stated as expense and cannot be deducted from any other tax. In addition, taxpayers will not be able to make any corrections regarding the notification/declaration of these assets.

• Notification of Foreign Assets to Banks or Intermediary Institutions

Natural persons or legal entities will be able to benefit from asset peace by notifying banks or intermediate institutions regarding the cash, gold, foreign currency, stocks, and other capital market instruments abroad until 31 March 2023. In addition, it is clearly stipulated in the regulation that it can be used to repay the loans received from banks or financial institutions abroad in order to encourage recording of the said assets. However, this is only possible in repaying loans registered with the statutory books as of 5 July 2021 until the effective date of the regulation, i.e., 31 March 2023. Even if there is no requirement to transfer the declared loans to Turkey, the tax rate will be applied as 0% provided that they are transferred and/or deposited to a bank account in Turkey or to accounts opened at intermediary institutions and kept in such accounts for at least one year.

Various tax benefits are contemplated under the regulation depending on the notification dates. Accordingly, banks and intermediary institutions will charge different upfront tax amounts as per the notification date based on the value of assets reported to them, as follows: (i.) 1% if notified until 30 September 2022; (ii.) 2% if notified between 1 October and 31 December 2022; (iii.) 3% if notified until 31 March 2023. Additionally, as tax supervisor, they are required to declare and pay the tax they collect to the tax office they are registered with until the evening of the fifteenth day of the month following the date of notification.

In order to clarify the asset peace regulation, the Turkish Revenue Administration prepared a draft communiqué titled “General Communiqué on Bringing Certain Assets to the Economy (Serial No. 1)” [the “Draft Communiqué“] and submitted it to the approval of the Grand National Assembly of Turkey on 8 July 2022. According to the Draft Communiqué, it is expected that some assets located abroad but are not covered by the asset peace, for instance real estates, to benefit from it. Also, any assets that normally do not fall under the scope of the asset peace may be transferred to Turkey until 31 March 2023 by having been exchanged gold, foreign currency, stocks, and other instruments of the capital markets to cash and still benefit from asset peace.

• Declaration of Domestic Assets to the Tax Office

If income and corporate taxpayers declare their assets and real estates mentioned in the above title to tax offices until 31 March 2023, a tax of 3% will be levied on the value of such assets, regardless of the declaration date. Transactions involving the registration of real estates and their transfer to the enterprise are exempt from title deed costs as long as they fall within the scope of the asset peace regulation.

• Capital Premia

In order for capital premia registered in the legal books as of the effective date of Law No. 7417 to benefit from asset peace, cash, gold, foreign exchange, securities, and other capital market instruments abroad must be transferred to Turkey before the effective date and such capital premium must be fully paid with these transferred assets.

Conclusion

It is aimed that taxpayers who will benefit from the asset peace regulation introduced by the Law No. 7417 will bring their assets located abroad to Turkey or have them registered in Turkey, thereby relieving the financing deficit in the country to some extent. In addition, with the said regulation, the Ministry of Treasury and Finance of the Republic of Turkey is authorized to determine the information and documentation to be sought regarding notification of and transferring the assets within the scope of the regulation to Turkey together with their transfer to the enterprise. With the Draft Communiqué coming into force soon, it is expected that the provisions regarding the asset peace regulation will be further clarified.

By Yasemin Keskin, Senior Associate, and Beliz Boyalikli, Legal Intern, Guleryuz & Partners

Strong efforts to protect the lira while keeping the economy healthy and vibrant in a time of global turmoil and uncertainty is the name of the game in Turkey, according to Guleryuz Partners Partner Zahide Altunbas Sancak.

“The overall financial situation and the depreciation of the Turkish lira have led to a number of legislative updates seeking to protect it,” Altunbas Sancak begins. “The financial situation directly impacts the political climate – of course, the reasons for this are many: the global crisis, rising inflation, and supply chain issues, to name but a few,” she says. “The Turkish government has instituted a number of protection measures for keeping the lira healthy, including implementing currency appreciation controls until the end of this year,” she explains. 

“Furthermore, there were credit restrictions imposed on borrowing in Turkish lira – if a company is holding more than TRY 15 million in foreign currency, it can no longer borrow in lira.” According to Altunbas Sancak, the idea of this control is “to prevent foreign currency speculation,” but she argues that the regulation “threads dangerously closely to capital control measures.” Additionally, the current status of the financial ecosystem in Turkey is influenced by the upcoming elections that should normally take place next year but are expected to happen sooner, in the face of opposition pressure. However, “no official communications have been made yet as to when they will occur.”

Altunbas Sancak also reports there has been a legislative update regulating assets. “Now, if unregistered assets are brought into the country, for example, money – it can be registered with a bank with a minimal tax burden without any inquiries made by the bank concerning the source,” she says. This measure, applicable until March 2023, seeks to encourage people to “introduce foreign assets into the local economy.”

Moreover, the war in Ukraine, the EU and US Russia-sanctions-related fallout, and the increase in e-commerce sector volume have led to “more regulatory updates to the Turkish ecosystem,” Altunbas Sancak explains. “As for the ongoing war in Ukraine and its impact on Turkey – the country had previously been acting and will continue to act as a trade corridor of sorts between Russia and western countries,” she says. The war has no doubt disrupted trade in the area, and “some legislative measures have been announced on the restriction of certain exports, such as some food items”, she adds, stressing that there has been a surge of client inquiries related to the war and, “especially, on Turkish multinational companies’ standing on US and EU sanctions.”

Finally, Altunbas Sancak says that the “legislator has started to take action with regulating the rapidly growing e-commerce sector. The government is attempting to implement a new competition framework for intermediate service providers, as well as vendors – there will be licensing requirements which will differentiate between the size of these platforms,” she explains. “Some of these changes will take hold by the end of the year, while others will be implemented by 2024 and 2025 – although we have already started receiving client inquiries,” Altunbas Sancak concludes.