Atty. ECE YILDIRIM, LL.M.
The irregularity and unpredictability of the economic conditions in the Republic of Türkiye has led to an increasing number of companies shifting their activities to overseas sales. The shrinking domestic buyer market and production capacity have made exports almost mandatory for commercial companies to continue their existence. However, companies that embark on exports without adequate preparation and know-how face a number of problems. In order to prevent these problems, a large number of legal legislation and regulations need to be researched. In this article, we will explain these issues for you.
- Customs Regulations
The most fundamental element of export is, of course, customs regulations. The most important advantage of an in-depth knowledge of customs legislation is in terms of tax exemptions. These exemptions may vary according to the nature of the goods and provides an additional profit for companies.
In addition, in order for exports to take place smoothly and reach the buyer’s hands, customs control and documents must be issued completely and accurately. The most important documents are export and customs declarations. These documents contain all the necessary information for the export of the product and are used to calculate customs duties.
Aside from declarations, documents such as invoices, certificate of origin, bill of lading and transportation insurance must also be issued. These documents are especially important for receiving payments from the buyer. While issuing these documents, the destination port/country of the goods should also be taken into consideration, and it should be checked whether there are any additional regulations required by the destination country. The consequences of violating customs regulations should not be ignored, irregularity in documents can lead to many problems, including criminal liability.
- Export Agreements
In difference from local sales contracts, there are several issues that should be included in the export contracts. Firstly Incoterms, which regulate both the cost and the responsibility of the parties, should be determined. Incoterms are a set of rules established by the International Chamber of Commerce to set the basic terms and conditions for multinational trade relations. The chosen way of delivery determines which party is responsible at which point in the transaction.
One of the most important issues in international law is the terms of payment. The method of payment (Letter of Credit, Cash, prepaid etc.) is a matter agreed in the contract. These clauses should be included in the contract to ensure payment security.
Even with all these conditions present in the contract, an often-overlooked aspect of export contracts is the determination of the applicable law and the competent courts. It will always be to the advantage of the parties to authorize the most appropriate legal system in order to secure themselves. The determination of the competent court will eliminate the objection of lack of jurisdiction in case of a dispute arising from the contract and will show a specific place for the parties to apply.
- Tax Obligations
Tax, which is a complex enough scheme in the domestic system, does not give up this characteristic in the international dimension. İt is possible for export transactions in Türkiye to be exempt from Value Added Tax, which is an important percentage. However, there are also considerations depending on the destination country. In addition, tax brackets may vary depending on the type of goods sold, their origin and the obligations of the final country.
- Currency and Payment Terms
As mentioned in the introduction, economic factors in Türkiye have become erratic and unpredictable. The most common reflection of this situation is encountered as the profits and losses arising from the fluctuation of exchange rates. If there is a wide difference in currencies between the moment the contract is concluded and the day of the payment, the result in Turkish lira may be an unexpected amount. For this reason, Hedging strategies can be applied to reduce the risk of loss that may occur.
Another important point is that with the change in payment methods, risk types will also differ. At this point, a clear and detailed specification of the form of payment in the contract may minimize the risks that may arise. During the determination of the payment method, attention should be paid to the foreign exchange policies and restrictions in the country where the contract will be made and the fluctuations in the exchange rate, and be informed and prepared for possible negative situations that may occur in the future.
- Transportation Insurance
Transportation insurances, which are generally ignored by exporters in our country, are important for the seller to continue his commercial life with the least loss in case of damage and loss of goods. Basically, separate regulations are applied depending on which of the land, sea, air and railway routes the transportation is made by.
Most exporters choose the lowest-cost insurance in order to minimize the cost of insuring their goods. However, these insurances generally do not provide the seller with the right to indemnification in the event of any incident to the goods; gross negligence is required for indemnification.
International regulations on transportation insurance ensure that insurance transactions around the world are carried out in a safer and more standardized manner. The Marine Insurance Act of 1906 provides the main regulations in maritime transportation, while the Institute Cargo Clauses serve as supporting legislation. Of course, it is not enough to be contended with these regulations, so much so that from the UCP 600 rules to the CMR Convention, there are dozens of international treaties that regulate insurances.
- Special Permits and Additional Regulations
Depending on the nature of the exported commodity, special permits may be required to carry out the export. The export of various goods, such as certain agricultural products, fish products, etc., is subject to special authorization by the Ministry of Trade. In addition to the documents and information required for export, prior approval must be obtained from the relevant ministry for the export of such goods.
Apart from the prohibitions and permits set by our country, the destination country of the goods also plays an important role in this situation. The legislation of foreign countries may prohibit the import of certain goods or require additional documentation. For example, while no additional documents are required for the export of shoes from Turkey to Pakistan, analysis documents may be required for the export of the same shoes to a European Union country.
