The stamp tax application was one of the uncertainties associated with the long-discussed requirement of conversion of certain foreign denominated contracts into Turkish Lira (TL) within the scope of the Presidential Decree no 85. This issue has now been clarified by the Revenue Administration with the Stamp Tax Circular/ 22 issued on 22 November 2018.
In accordance with the Circular:
- For conversion documents, no additional stamp tax will be levied, provided that the below conditions are collectively met:
the document exclusively amends the contract value of the original contract to determine it in TL, and other provisions of the contract (the parties, maturity, additional obligations, etc.) remain unchanged;
the amended total contract value in TL after conversion does not exceed the TL equivalent of the foreign denominated contract value of the original contract calculated by multiplying such foreign denominated value with the sale exchange rate announced by the Central Bank of the Republic of Turkey on the date of execution of the conversion document;
the document refers to the original contract.
- If these conditions are not met, stamp tax will accrue over the excess amount, unless stamp tax of the original contract was paid over the stamp tax ceiling. If other amendments are also made in the conversion document, stamp tax will accrue in accordance with general principles governing stamp tax depending on the type of amendment.