New regulation on foreign exchange conversion support from the Central Bank of Turkey: Value added will be taken into account

The Central Bank of Turkey's "Communiqué on the Amendment of the Communiqué on the Support for the Conversion of Firms' Foreign Exchange from Abroad into Turkish Lira" was published in the Official Gazette.

The regulation, which brings significant changes in the foreign exchange conversion support practice, states that companies will benefit from the foreign exchange conversion support proportionally to the value added they produce.

The value added of companies will be calculated based on their profitability and labor costs. Intermediary exporters will be able to perform foreign exchange conversion transactions on behalf of suppliers with high value added when they have filled their value-added based limits. In this case, the foreign exchange conversion support will be directly deposited into the supplier's account.

The commitment not to receive foreign exchange was removed and replaced by a foreign exchange position requirement

Similar to rediscount loans for exports and foreign exchange earning services, a regulation based on foreign exchange positions was made instead of the commitment not to receive foreign exchange for companies benefiting from foreign exchange conversion support. Accordingly, the foreign exchange positions of companies cannot exceed the upper limit to be determined by the Central Bank before the foreign exchange conversion support application.

The intermediary functions of banks, which have an important role in the effective implementation of the practice, were strengthened and additional measures were taken to increase the effectiveness of the practice.

These changes will be implemented starting October 1. The details of the regulation will be included in the Implementation Instruction.

The period for the 3 percent support payment and the 35 percent export proceeds sales obligation was extended

With the communiqué, while the basic rate of foreign exchange conversion support was set at 2 percent, it was decided to extend the temporary period related to the application of the 3 percent support payment and the 35 percent export proceeds sales obligation until January 31, 2027. The temporary applications were set to expire on July 31.