Under the amended Decree No. 32, save for certain exceptions, foreign currency income is now a prerequisite to obtain foreign currency loans. The Decree No. 32 defines foreign currency income as revenue generated from: (i) export; (ii) transit trade; (iii) sales and deliveries deemed as export; and (iv) services and activities generating foreign currency income. The Capital Movements Circular provides further clarification of these items.
In particular, the Capital Movements Circular clarifies that foreign currency income generated from Turkish residents will not qualify as foreign currency income unless it is generated from sales, services and activities falling within scope of the Communiqué on Tax, Duty and Charge Exceptions on Export, Transit Trade, Sales and Deliveries Deemed as Export numbered 2017/4 (the Communiqué No. 2017/4).
The Capital Movements Circular also refers to the Communiqué No. 2017/4 for the scope of sales and deliveries deemed as export and services and activities generating foreign currency income (items (iii) and (iv) referred to above).
Communiqué No. 2017/4 lists the following as falling within scope: (i) sales and deliveries by companies undertaking manufacturing works or research and development projects in the defense industry, security or intelligence fields; (ii) construction; consultancy, software and engineering services, whose recipient is located outside of Turkey; (iii) activities of and services by companies undertaking investment projects; or (iv) construction and renovation of facilities under the public-private partnership (PPP) model.
Subject to approval by the relevant Ministry, other revenues generated from commercial activities may also qualify as foreign currency income so long as they are collected from persons resident outside of Turkey (including revenues in Turkish Liras).
Revenues generated from the export and transit trade to free zones will qualify as foreign currency income provided that the subsequent sale of the relevant goods to a third country are certified.