The Central Bank of the Republic of Turkey ("CB") amended the Regulation on Procedures and Principles for Monitoring Transactions Affecting Foreign Exchange ("FX") Position ("Regulation"), changing the notification criteria for firms obligated to notify its FX p,ositions regarding its foreign exchange assets and liabilities to the CB. The amendment will enter into force on January 1, 2024.

With the amendment to the Regulation, summary FX position reporting requirementwhich has been in effect since March 2023 for firms having a total cash and non-cash loan balance equal to or exceeding TRY 10 million is abolished.

Further, the criteria for determining firms subject to reporting obligations will also change. The notification obligations will be based not on the total of cash loans in FX and loans indexed to FX but on the total cash loan, net sales revenue, and total assets size.

Pursuant to the amendment, firms having a total cash loan balance obtained from domestic and foreign lenders equal to or exceeding TRY 100 million as of the last business day of the relevant monthly accounting period, and firms having a net sales revenue or total assets equal to or exceeding TRY 500 million or more in the past fiscal year, are required to report such information to the CB. Prior to the amendment, firms with the sum of foreign cash loans obtained from domestic and foreign lenders, along with FX-indexed loans, equal to or exceeding USD 15 million as of the last business day of the relevant monthly accounting period were subject to reporting obligations.

The changing conditions for firms subject to reporting obligations also bring about various updates to the reporting requirements:

  • If the loan amounts are in foreign exchange, their equivalent in TRY will be calculated based on the official exchange rate published in the Official Gazette on the last business day of the relevant period.
  • The fact whether firms are subject to reporting obligations will be based on the total cash loan balance. The calculation for net sales revenue and total assets will be based on the annual corporate tax filings.
  • If the total cash loan balance, net sales revenue, or total assets fall below the limits set by the CB, the reporting obligation will cease starting from the subsequent annual accounting period.
  • The CB may update the criteria for loans, net sales revenue, and total assets determining the notification obligation.
  • Firms' management will be responsible for determining as to whether the notification obligation arises.

ConclusionWith the amendments to the Regulation, the CB aims to simplify reporting procedures for firms.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.