Structural Transformation in the Turkish Financial System with Law No. 7555

Adopted on July 20, 2025 and published in the Official Gazette on July 24, 2025, Law No. 7555, titled "Law on the Protection of the Value of Turkish Currency and Amendments to Certain Laws and Decree Law No. 635," introduces a wide array of reforms that redefine the structural elements of the Turkish financial system. By enhancing tools to protect the domestic and foreign value of the Turkish Lira, this Law also includes significant reforms in taxation, incentives, social security, and sectoral licensing.

From foreign exchange operations to precious metal trade, from VAT-SCT adjustments to R&D exemptions, from LPG market regulations to notifications via registered electronic mail, the Law expands the scope of current legislation, increases administrative fines, and introduces new oversight mechanisms.

Expanded Authority and Oversight in Foreign Exchange and Precious Metals Transactions

The first three articles of the Law amend the Law No. 1567 on the Protection of the Value of Turkish Currency. Within this scope, the President is granted direct authority to regulate foreign exchange transactions, and the domestic and international trade, import/export of currency, precious metals, gemstones, and their derived products.

Administrative fines for unauthorized currency and precious metal transactions have been increased. Non-criminal violations will now face penalties ranging from 50% to 200% of the market value. Repeat violations within five years may result in maximum and doubled fines.

To prevent unauthorized business activities, it is now possible to permanently shut down all operations of a business engaging in unlicensed activity requiring official authorization. This aims to strengthen market regulation through administrative means.

Licensing Obligations and Fee Schedules: A New Era in Authorization

With the amendment to Article 4 of Law No. 1567, it is now legally mandatory for institutions engaging in:

• Commercial currency trading,
• Membership activities within the Borsa Istanbul Precious Metals Market,
• Precious metal refinery operations,
• Activities under the Kimberley Process Certification Scheme,

to obtain an operating license from the Ministry of Treasury and Finance.

Previously, such authorizations were governed by secondary regulations such as communiqués and circulars. The new amendment establishes a clear statutory basis for licensing.

Financial obligations related to these authorizations are defined through newly introduced Fee Schedules No. 1, 2, and 3. The Law sets detailed rules for branch openings, changes in operational zones, relocation of headquarters, and share transfers. Except for limited exceptions (e.g., intra-family share transfers, court-mandated acquisitions), separate fees are charged for each license type. Fees will be updated annually based on the revaluation rate. The President is authorized to reduce or double these fees.

Major Amendments in Tax Legislation

The Law also introduces several technical and structural changes in the field of taxation.

Tax Procedure Law

A key reform under the Tax Procedure Law is the introduction of digitally issued verification reports. In such cases, which include location-based and photographic documentation, the signatures of local officials (e.g., police, muhtar, gendarmerie) are no longer required. This marks an important step in the digitalization of tax auditing procedures.

Value Added Tax (VAT) and Special Consumption Tax (SCT)

Amendments to Law No. 3065 on VAT provide that vehicle deliveries to institutions such as the Ministry of National Defense and the National Intelligence Organization, for defense and internal security purposes, are now exempt from VAT. In parallel, Law No. 4760 on SCT has also been amended to grant SCT exemptions to the same vehicles.

The Law also introduces a comprehensive overhaul of the SCT base and rate system, using technical parameters such as engine power, battery capacity, range, and engine displacement as the basis for taxation. Vehicles with a local content ratio exceeding 40% benefit from additional favorable provisions.

Tightening of the Investment Incentive Regime

Amendments to Article 32/A of the Corporate Tax Law (Law No. 5520) limit the reduced corporate tax rate for incentivized investments to 60% and restrict its application to a maximum of ten fiscal periods. The President is granted the authority to determine support ratios up to 50%, allow reduced rates to be used during the first four fiscal periods, raise the support ratio up to 100%, and impose limits on certain cost components of the investment (e.g., land, buildings, used machinery).

In addition, personal income tax exemptions in R&D and technology development zones, as well as research infrastructure institutions, are now capped. Exemptions may apply only to wage amounts not exceeding 40 times the gross minimum wage, introducing an upper threshold that effectively excludes high-income beneficiaries from the scope.

Revised Trading and Storage Rules in the LPG Market

Amendments to Law No. 5307 on the LPG Market prohibit distributors from reselling LPG purchased from other distributors. Moreover, storage facilities with available capacity must fulfill third-party storage requests, subject to conditions ensuring safety and operational integrity. Tariffs for such storage activities will be subject to EPDK (Energy Market Regulatory Authority) approval, and the initial tariff proposals must be submitted by 1 December 2025. Violations of these provisions are subject to administrative fines and potential license revocation.

Registered Electronic Notifications and Streamlined Social Security Applications

Amendments to the Labour Law (Law No. 4857) authorize the use of Registered Electronic Mail (KEP) for notifications related to employment relations. However, termination notices must still be delivered in written form. The Law also places the cost of the KEP system on the employer.

Separately, new provisions added to the Social Security and General Health Insurance Law (Law No. 5510) authorize foreign missions and attachés to accept certain social security-related applications. This is expected to improve access to services for Turkish nationals living abroad.

Effective Dates and Transition Timeline

While many provisions of the Law entered into force on 24 July 2025, several articles are subject to staggered effective dates. Specifically:

• Articles 5, 8, 11, 19, and 20 enter into force on 1 August 2025.
• Articles 16, 17, 24, and 25 will become effective as of 1 January 2026.
• Article 18 applies only to incentive certificates issued after the publication date.

Accordingly, both public institutions and private sector actors are strongly encouraged to review the implementation schedule and take the necessary steps to ensure timely compliance. Following secondary legislation and preparing internal procedures in line with the new framework will be essential for legal and operational alignment.