Draft Law of Repatriation of Capital – Incentive for Cash Flow from Abroad to Turkey

Posted on 08/05/2013 by burcinbarlas

Draft Law of Repatriation of Capital has been proposed to council lately. Such draft, expected to become law shortly, includes determinations as follows:

According to the draft, individuals and legal entities that intend to get their assets recorded in Turkey shall pay tax, in Turkish currency, at the rate of 2% that is to be calculated upon the current value of such assets

April 22, 2013 is the initiation date as per the draft. Following such date, cash, gold, foreign currency, instrument and other capital market intermediaries and real properties that are justified via convincing documentation; shall be notified, until July 31, 2013, to tax offices or banks or intermediaries that operate in accordance with the related law.

According to the draft; tax shall be levied at the rate of 2% of the value of the assets and such tax amount shall be paid until the end of the levied month.

Tax paid according these articles shall not be set-off from another tax.

Tax audit and tax levy shall not be executed on declared assets.

For instance; X brought 2.2 million TRY to Turkey. Tax inspection is applied to X following the Cash Repatriation Draft becomes law and it is determined that he has concealed 1.8 million TRY of income from the authorities. In this case no income tax, corporation tax, VAT or tax penalty will be applied to X. However, if his income is 2.2 million liras, tax and tax penalty will be applied to the exceeding amount which is 200.000 TRY.

Turkish Petroleum Market Law and Its Implementations

Posted on 19/04/2013 by burcinbarlas

Petroleum Market Law numbered 5015 (“the New Law”), as determined in its justification, was enacted by the Grand National Assembly of Turkey (“GNAT”) at December 4, 2003 within the efforts performed to institutionalize the market economy and improve the competitive environment in order to update the current legal regulations in the petroleum and petroleum product industry in absolute coherence, regulate the markets within such approach and meet the requirements accordingly.

1- Regulative Authority:

It is inevitable for an autonomous authority that is independent from an administrative view to be given power in line with the purposes that are determined in the New Law. Thus, the New Law, for the determination, observance and inspection of the petroleum market and fulfillment of duties, has authorized the Energy Market Regulatory Authority (“the Authority”) which was authorized by a separate act, instead of the Directorate General of Petroleum Affairs (“the Directorate General”) of the Ministry of Energy and Natural Resources which was authorized by the Former Law.

2- Obligation to Obtain License and Fundamental Rights and Obligations of License Holders:

It is mandatory to obtain a license to perform below stated activities regarding petroleum market;

- Refining, processing, mineral oil producing, storing, transporting, performing free user activities and building and/or operating a plant for such purposes;

- Distributing and transporting fuel products and performing dealer activities.

3- Ownership and Expropriation

Acquiring ownership and rights of land, premises and buildings necessary for the facilities in line with the New Law by way of prior agreement execution constitutes the basis. However, it is also possible to adopt the expropriation procedure within the conditions stated in Expropriation Act in case specific facilities cannot be acquired by way of concluding an agreement. The resolution of expropriation settled by the Authority is deemed to be a public interest resolution.

4- Price Determination in the Market

In accordance with the provisions of the New Law, prices in petroleum purchase and sale are determined in line with the “world’s most reachable free market conditions”. The mentioned determination is designated to render the petroleum prices in Turkey and free market price determination to be in balance with the outer markets at all times.

5- Import and Its Execution Conditions

It is mandatory for the ones to acquire at least one of refining, distributing or bunkering license to import crude oil or fuel products. Import of crude oil and fuel products are executed by competent customs that are capable of performing specific measurements. Fuel product import is limited with the products that are stated under the sub title of the related license and such import can only be executed after the Authority is informed of the marketing projection and dealer information. All activities including import and export related to petroleum products other than fuel products (solvent, mineral oil, base oil, asphalt, solvent naphtha etc.) are performed according to the determinations designated by the Authority.

Incoterms 2010 – International Trade

Posted on 12/04/2013 by burcinbarlas

Determinations of Incoterms 2010 are drafted by the International Chamber of Commerce (ICC) and designate the terms of indemnifications of trade that takes place between the buyer and seller on national and international platforms. Incoterms 2010 has become effective as of January 1^st, 2011 and contain determinations both for internal and external trade.

Obligations of both the buyer and the seller sides are determined in detail under Incoterms rules. In order to make such rules applicable, the parties shall determine the clear explanation of the place and the clause they intend to use. For example; FOB İzmir / Alsancak Port / Incoterms 2010.

The most significant breakthrough that comes with Incoterms 2010 is that there are two classifications as following; 7 types of clauses “that comprises all ways of transportation” and 4 types of clauses of “that comprises sea and internal waterage”.

Following are the most used clauses;

DAP (Delivered at Place), the goods are delivered to the Buyer by the transporter at an agreed point. The Seller is under the risk for the transportation cost and terminal related damage.

DAT (Delivered at Terminal), the goods are delivered to the Buyer to be unloaded by the transporter at an agreed point and such clause which now can be used for multiple transportation, replaces the former DEQ clause. The goods may be delivered to an agreed point for the Buyer (fr: a port) when the unloading cost is born on the Seller. The Seller compensates the cost of transportation. However, customs transactions, duties and levies remain on the Buyer side.

According to the former determination, the damage risk of the goods was on the Seller side provided that the ship’s rail is not exceeded. Such situation used to cause proof problems in practice. In line with the determinations of Incoterms 2010, the damage and the risk of the goods remain with the Buyer side as long as they are duly shipped.

In conclusion, delivery conditions of external trade shall be set following the necessary calculations are executed and the other party shall be notified of such conditions accordingly.

Parties of an Escrow Agreement and Related Terms in Accordance with Turkish Legislation

Posted on 21/02/2013 by burcinbarlas

Buyer; is the party that intends to purchase an asset which is either a property or share of a company.

Seller; is the party that agrees to dispose his property or share to the Buyer.

Escrow Agent; is the party that holds the agreed amount in escrow until one or more of the release conditions of the escrow agreement are fulfilled.

Foundation; is the institution incorporated by the Escrow Agent.

Escrow Account; is the designated bank account of which is opened by Escrow Agent on behalf of the Foundation.

Escrow Amount means the amount, after deduction of any bank charges, as received and confirmed as received by the Escrow Agent on the Escrow Account.

Escrow Balance; is the escrow amount increased with the escrow amount interest.

Escrow Claim Notice; is the notice which is to be used by the Buyer to inform the Escrow Agent that a claim has been issued with regard to a part or whole of the Escrow Amount.

Escrow Release Notice; is the notice which is to be used by Parties of the escrow agreement to instruct the Escrow Agent to release partially or wholly the Escrow Amount to a Party in compliance with the escrow release conditions.

Turkish Aviation (Air) Law – Nonobservant Passenger

Posted on 15/02/2013 by burcinbarlas

According to the Regulation that will be in effect as of January 1, 2014, nonobservant passenger is defined as follows; the individual that places risk to the other passenger’s or staff’s lives or orders, damages or threatens the equipment on board or violates the rules or civil aviation or the crew’s from boarding until deplane.

The nonobservant passenger shall first be warned stating that his acts are against the Regulation and he may be booked afterwards in case he keeps violating the rules. Such booking shall be submitted to the General Directorate of Civil Aviation. In case there is an objection raised, the onus of proof lies with the related airway.

Following are the crimes and punishments determined for the nonobservant passenger;

1. Nonobservant passenger is fined TRY 1.000 if he continues to operate electronic device.

2. Nonobservant passenger is fined TRY 1.000 if he does not fasten his seat belt or sit on his seat, he does not close overhead board, argues with the cabin crew or other passengers, prevents the cabin crew from performing their duties, applies verbal harassment to the other passengers, does not comply with the instructions of the cabin crew, acts in a threatening way that imperils flight safety.

3. Nonobservant passenger is fined TRY 1.000 if he smokes inside the plane.

Such fine shall be deposited to the account of the General Directorate of Civil Aviation in one month following notification. In the event that he does not bring an action against such fine, he may be relieved by paying ¾ of the fine. Such fine may be divided into installments for individuals with non-consistent economic conditions.

The individual may apply to the Criminal Court of Peace in 15 days following the notification of the fine. In case there is no application submitted in the determined period, the fine is finalized.