Cost Of Financing in Turkey

The costs of inancing can mainly be divided into two groups; the payments to be made to the bank providing the inancing, and applicable taxes. The payments to be made to the bank which provides the inancing are mainly the interest to be accrued on the loan amount, commissions, fees and expenses. In terms of taxes, stamp duty, the banking and insurance transaction tax (BITT), and the resource utilisation support fund (RUSF) are the most important taxes.

The payments to be made to the bank providing the inancing usually consist of interest, commissions, fees (such as arrangement fee, commitment fee, prepayment commission, cancellation commission), costs and expenses associated with the loan. Interest would accrue on the cash loan while non-cash loan commission would accrue on the non-cash loans. These may be diversiied and vary depending on the type of inancing obtained and can also bear diferent names. Certain costs may also be associated with the side products, including but not limited to card fees, account management fees, portfolio fees, fees for enquiry, reports, release etc.

It should be noted that the above are matters that can be freely agreed by the parties based on their discretion and commercial agreement, as long as both parties are commercial parties (tacir) within the meaning of the Turkish Commercial Code. However, if one of the parties is a consumer, then all of the payments to be made to the bank must comply with the legal requirements and restrictions in relation to the protection of the consumers.

As to the taxes arising in relation to the inancing, special attention should be given to stamp duty, BITT and RUSF. There are several exemptions provided for in the relevant legislation.

Stamp duty is a tax imposed by the Stamp Duty Law and according to the said law stamp duty is imposed at the rate of 0.948 % of the aggregate principal amount expressed in an agreement, however Article IV. 23 of Table No. 2 of the Stamp Duty Law provides for an exemption for the loan agreement and the security documents in relation to loans utilised from banks and international credit institutions.

The amount of RUSF that needs to be paid (a) over the interest amount, for TRY-denominated loans; and (b) over the principal amount, for foreign currency loans, is determined under the Central Bank Communiqué No. 6 relating to Decree No. 88/12944. There are several exemptions provided in the relevant legislation.

The BITT accrues on the interest, fees, commissions and charges to be paid to a Turkish bank and any income realised by such Turkish bank at the rate of 5%. BITT may also be imposed on a bank who is incorporated, organised or has its principal oice in Turkey, even if such bank makes the facility available from or carries all or part of its portion of the facility on the books of or receives any amount payable thereunder at any of its foreign branches.