The concept of “Certain Amount of Money” in the application of the Stamp Duty Law
I. Introduction
The stamp duty legislation has a long history which dates back to the Ottoman period. The Stamp Duty Law
no. 488, which became effective in 1963, shapes the application of stamp duty today upon many amendments
made over the years.
Stamp duty is based on the taxation of documents and papers which are the basis of legal transactions.
Basically, stamp duty is a transaction tax which is applied to the legal transactions conducted on the basis of
commercial transactions.
Considering the issue from a financial perspective, according to the data provided by the General Directorate
of Budget and Financial Control and the General Directorate of Public Accounts of the Ministry of Finance,
stamp duty constitutes 2,55% of the total tax revenue derived in 2011, while it is foreseen that it will make up
2,45% of the 2012 budget. These figures clearly show the position of stamp duty among the tax revenues. The
position of stamp duty among tax revenues comparing with the practices in the world and its share in the tax
revenues can be evaluated in another article.
This article dwells on the concept of “certain amount of money” in the application of stamp duty; in other
words, it evaluates the figures which are/are not stated in the contract within the framework of “certain amount
of money”.
II. Legislation
According to the Schedule no. (1) attached to the Stamp Duty Law, papers classified under four groups as
“contracts, decisions and minutes, papers used in commercial transactions, receipts and other papers” are
subject to stamp duty.
For a paper to be subject to stamp duty, it should be a document which is issued by being written and signed,
or by being marked with a sign that replaces a signature and which can be used to prove or evince an issue or
a document created with electronic signature in magnetic media as electronic data.
As per Article 2 of the Law which explains the scope of the tax, letters and annotations which are in the nature
of taxable paper or which replace these taxable papers, the letters and annotations which relate to the
renewal, extension, change, transfer or termination of the provisions of these papers shall be subject to stamp
duty.
Pursuant to Article 4 of the mentioned Law, if there is a reference to another paper on the paper whose nature
is to be determined, tax shall be applied on the basis of the nature which is acquired with regard to the
provisions of the paper to which the reference is made.
Article 6 of the Law stipulates that if there are more than one contract and transaction completely independent
from one another, each one shall be separately taxed and if the contract and transactions combined in the
same document are connected with each other and result from a single transaction, stamp duty shall be
applied to the contract or transaction subject to the highest rate of duty.
Article 10 of the Law which explains the taxation rates, states that stamp duty shall be collected in the form of
proportional or fixed duty. In proportional duty, the nature of the certain amount of money written on these
papers shall be taken as a basis, while in fixed duty the nature of the papers shall be taken into account. On
the other hand, it is noted that the term “certain amount of money” shall refer to the money which the papers
include or which the figures written on these papers will generate.
According to the mentioned Article of the Law, “certain amount of money” refers to the amount stated on the
paper or derived from the figures stated on the paper.
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Kuzey YMM A.Ş.
Büyükdere Cad. Beytem Plaza
No:22 K:2 - 8, 34381 - Şişli
İstanbul - Turkey
Tel: +90 (212) 315 30 00
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III. Obligation to indicate a certain amount of money
Under the article 11 of the Stamp Duty Law, the amount or maximum limit of the money lent or transferred
must be indicated on letters of commitments and written contracts pertaining to loans extended as current
accounts and all kinds of money lending transactions (including discount loans – dispense), as well as papers
pertaining to these papers’ transfer, renewal, assignment and amendment and letters of conveyance and
written contracts pertaining to the transfer and conveyance of debts.
The aforementioned regulation is limited to current accounts, all kinds of lending contracts and similar
contracts. Therefore, it would not be appropriate to implement this provision for all contracts.
In cases where a certain amount of money is not indicated, the stamp duty and penalty applicable to each
paper shall be calculated and levied according to the credit or loan amount in the related current account, on
the date when the event occurs.
The borrower and lender, as well as the transferor and transferee entities and individuals are jointly and
severally liable for payment of the tax and penalty.
IV. Issues causing hesitations regarding the concept of “certain amount of money”
Below are some examples for issues experienced in practice in the determination of “certain amount of
money”, which should be calculated on papers.
A. In case of absence of a “certain amount of money” on the agreement at the moment when the
agreement is drawn up
In the clause I/A-1 of the Schedule no. (1) attached to the Law, which was amended with the article 7 of the
Law no. 5281 as of 01.01.2005, it is stated that written contracts, letters of commitment and letters of
conveyance that include a certain amount of money are subject to stamp duty at the rate of 7,5 per thousand;
written contracts, letters of commitment and letters of conveyance that do not include a certain amount of
money are not included in the Schedule no. (1). On the other hand, this rate was increased by 10% as per the
Stamp Duty General Communiqué series no. 53, which was published in the Official Gazette dated
31.12.2009 no. 27449, and it was stipulated that this rate shall be applied as 8,25 per thousand to written
contracts, letters of commitment and letters of conveyance as of 01.01.2010.
Since the papers that are listed in clause I/A of the Schedule no. (1) and that do not include a certain amount
of money are excluded from the scope of stamp duty under the new regulation, written contracts, letters of
commitment and letters of conveyance that do not include a certain amount of money shall not be subject to
stamp duty.
On the other hand, it is stipulated under the Stamp Duty General Communiqué series no. 43 that written
contracts, letters of commitment and letters of conveyance, lease contracts, letters of bail, guarantee and
pledge as well as letters of termination, which do not include a certain amount of money, shall not be subject
to stamp duty.
In accordance with these statements, stamp duty shall not be calculated in proportional taxation, in cases
where a certain amount of money is not specified explicitly on the contract and its attachments, or a certain
amount of money cannot be calculated based on the contents of the contract.
The rulings provided by the Ministry of Finance and judicial decisions also state that a paper shall be subject
to proportional stamp duty on the condition that the paper explicitly includes a monetary figure or figures that
allow mathematical calculation of an amount, on the date when the event triggering taxation occurs, i.e. the
date of signing the contract.
On the other hand, with respect to papers which do not include a certain amount when they are issued, if an
amount is determined after the contract is issued and an annotation is put on the contract or a new paper
(approval, confirmation, letter, etc.) that indicates the certain amount of money pertaining to the paper and that
refers to the initial paper is issued, the paper/annotation pertaining to amendment would have to be subject to
stamp duty. However, stamp duty shall not be required contracts that are not documented as explained above
and that are only established through an invoice or independent personal service receipt issued between two
parties. This is due to the fact that invoices and independent personal service receipts are not listed among
papers subject to stamp duty in the Schedule no. (I) attached to the Stamp Duty Law.
Kuzey YMM A.Ş.
Büyükdere Cad. Beytem Plaza
No:22 K:2 - 8, 34381 - Şişli
İstanbul - Turkey
Tel: +90 (212) 315 30 00
Fax: +90 (212) 234 10 67
www.vergidegundem.com
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In this respect, in the determination of whether a paper is subject to stamp duty, the papers referred to in the
paper in question should also be taken into account. If these papers involve a base that would require stamp
duty calculation, stamp duty would have to be calculated considering this base as well.
In the tax ruling dated 24/05/2011 no. B.07.1.GİB.4.06.17.02-DMG-231-305 it is stated, “It has been
understood that the subject of the agreement is on-demand supply of system engineers and/or technicians to
carry out installation, calibration, alignment and maintenance works required in Air Traffic Control Complex
buildings by .......... Turizm Nak. Bil. İşl. Taah. Dış Tic. ve Mobilya San. ve Tic. Ltd. Şti. (sub-contractor)
throughout the whole term of the main agreement and the second article of the agreement includes
determinations that the amount of the agreement depends on the number of personnel to be demanded by
your company as contractor. In this context, since there is no determination regarding the number of system
engineers and technicians to be assigned, in the “Agreement on the Purchase of Goods at Lump Sum Price
for …. Work” and the paper titled “…Sub-Contract Agreement for …. Procurement” issued in addition to the
aforementioned paper, no amount can be calculated and therefore no stamp duty should be required for the
paper, which does not include a certain amount of money.”
B. In case an amount can be calculated although a “certain amount of money” is not specified
explicitly in the agreement
In case the “certain amount of money” is not specified explicitly in the agreement, while an amount can be
calculated based on the agreement, stamp duty should be calculated over this amount.
In practice, different cases are encountered with respect to the issue. Price and quantity details are included in
certain papers, which makes it very easy to reach the agreement amount.
However, certain contracts only include quantity details and no price details, and vice versa.
There are different opinions on whether stamp duty shall be calculated over such contracts or not.
According to the wording of the Law, it is understood that stamp duty shall be calculated over the amount to
be constituted by figures written on the contract (along with the papers referenced therein, if any) and in case
the agreement specifies the quantity but does not specify a unit price, the paper could be considered not
subject to stamp duty since there would not be a certain amount of money in the paper.
On the other hand, there are opinions according to which the concept of inclusion of a certain amount of
money refers not only to monetary figures written explicitly on the contract, but also to the presence of certain
amounts computable based on the provisions of the contract. In other words, even if the price of work to be
conducted is not explicitly written on a contract, in case the contract includes details such as how many times
the related works will be performed and the unit cost of these works as of the date when the contract is signed
and an approximate amount is calculable based on such details, then it would be concluded that the certain
amount of money included in the contract can be calculated and stamp duty should be calculated over this
amount.
Certain judicial decisions regarding the issue state that, in case a certain amount of money can be calculated
on the basis of prices and values that are not specified in the contract but that can be determined somehow, it
could be accepted that the stamp duty should be calculated over these amounts.
C. The concept of “certain amount of money” in sales/premium agreements
It is observed in many sales agreements that if the designated limits are exceeded, the seller is required to
pay certain amounts in the name of the buyer under the name of turnover premium/sales premium. There are
different comments on whether these agreements include certain amounts or which amount will be taken into
account if it is accepted that there is a certain amount of money. The matter can be explained with an
example.
The conditions of the sales premium agreement concluded between firm A which owns the brand “A” and the
distributor firm B are as follows:
In the purchases which firm B makes from firm A, firm A will pay sales premium to firm B at the amounts
specified below:
Kuzey YMM A.Ş.
Büyükdere Cad. Beytem Plaza
No:22 K:2 - 8, 34381 - Şişli
İstanbul - Turkey
Tel: +90 (212) 315 30 00
Fax: +90 (212) 234 10 67
www.vergidegundem.com
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2% for the product
3% for the product
4% for the product
5% for the product
purchases between TL 0- 500.000,
purchases between TL 500.000-1.000.000,
purchases between TL 1.000.000-2.000.000,
purchases between TL 2.000.000 TL-5.000.000
Assuming that there is no other amount in the agreement and considering the brackets above, opinions on the
assessment of the stamp duty base are as follows.
First opinion: Considering that the quantity of the sales is not definite on the date when the agreement was
signed, there is no certain amount of money in the agreement; therefore, stamp duty base will not be formed.
Second opinion: The highest possible transaction value in the agreement should be taken into account.
According to the example provided above, the stamp duty base is calculated as (500.000 x % 2) + (500.000 x
% 3) + (1.000.000 x % 4) + (3.000.000 x % 5) = TL 215.000.
The justification for this opinion lies in Article 6 of the Stamp Duty Law. Accordingly, it is argued the purpose of
stamp duty is to tax the contract in the agreement, namely, the transaction which is subject to the agreement,
on which the parties agree and which mutually binds the parties. Furthermore, it is claimed that the
consideration of the transaction value as the stamp duty base does not conflict with the wording and nature of
stamp duty, whereas it is also stated that the stamp duty amount levied in some cases might be higher than
the transaction subject to agreement.
There is a recent judicial decision which is consistent with this opinion. This decision states that in the
assessment of the stamp duty base, the transaction value in the agreement must be taken into account
instead of the value in the agreement. This decision was taken by unanimous vote.
The third opinion claims that the highest value in the agreement (TL 5.000.000) should be treated as the
certain amount of money. The argument which is presented to support this view puts forward that the figures
stated in the agreement constitute a legal provision. According to the abovementioned example, although firm
B has made a purchase of TL 1.500.000, if 5% premium is demanded and a dispute with firm A arises, the
decision can be taken by considering the sales quantity brackets in the agreement.
On the other hand, a tax inspection report issued by inspectors supports this opinion. The report notes that
stipulating that the figure written in the agreement must be a monetary equivalent of the acquisition to be
made is not a condition written in the wording of Article 10 of the Stamp Duty Law, and the condition
precedent which is written in the agreement, which constitutes a provision for both parties and evaluated as a
certain monetary value will be added to the stamp duty base. It is also marked that if the amount in the
agreement is bound to a specific condition and how and when the condition precedent will be consummated is
not definite as of the date when the agreement was signed, this does not mean that the figure which is clearly
written in the agreement and which constitutes a provision will not be added to the stamp duty base.
In the ruling no. B.07.GİB.4.34.18.01/2.1.1142.204/1508.2346 issued by Istanbul Tax Administration on
04.07.2008, it is stated that the subject of the transaction is the intermediation in the collection of the share
certificates, whose total nominal value amount to TL 4.469.632, on call as per the “Agreement on
Intermediation in Call” which is concluded between … and …. The ruling notes that the stamp duty base of the
mentioned agreement should be the call purchase value which must be calculated by multiplying the call price
of a share which is the intermediation fee with the number of share certificates which is subject to the total call.
There is no resource in public platforms which could present the opinion of the tax authority and which could
allow us to reach a clear conclusion regarding the issue. Nevertheless, it is observed that inspectors issue tax
inspection reports parallel to the abovementioned ruling within the framework of the opinions which claim that
the highest amount in the agreement should form the stamp duty base.
D. In case the transaction value subject to the contract is determined as a percentage of revenue
Contracts where franchising, royalty or license fees are determined as a certain percentage of revenue
derived in the scope of the contract are frequently encountered in practice.
In case the revenue amount is determined in the contract, it would be possible to determine the stamp duty
base without any issues. However, in case the contract amount is determined as the “service” value that will
be calculated on the basis of monthly/annual sales values to be achieved in the future, there would not be a
Kuzey YMM A.Ş.
Büyükdere Cad. Beytem Plaza
No:22 K:2 - 8, 34381 - Şişli
İstanbul - Turkey
Tel: +90 (212) 315 30 00
Fax: +90 (212) 234 10 67
www.vergidegundem.com
www.ey.com
“certain amount of money” in the agreement, since the sales values would not be known at the moment when
the agreement is signed.
In the tax ruling no. B.07.1.GİB.04.99.16.01/2-MUK-79-10525 dated 13.06.2007, which was provided by the
Large Taxpayers’ Office with respect to the issue, it is stated, “we have been informed that the license fee to
be accrued is prescribed as a certain percentage of sales to be performed monthly, according to the wording
of the license contract between your company and a non-resident company and we have been inquired
whether the license agreement to be issued would be subject to stamp duty in your case, where it is not
possible to exactly know an event to occur in the future. In this respect, contracts that do not include a certain
amount of money are excluded from the scope of stamp duty and contracts to be issued after this date and
that do not include a certain amount of money should not be subject to stamp duty”.
V. Conclusion
In this article, we have generally tried to explain the concept of “certain amount of money” in the agreement,
which is frequently subject to hesitations in stamp duty application, with certain examples; up-to-date tax
rulings provided by the tax authority and State Council decisions.
We are of the opinion that a detailed communiqué to be published by the Ministry of Finance with respect to
the issue would play a significant role in the elimination of hesitations encountered in practice.
Explanations in this article reflect the writer's personal view on the matter. Ernst & Young and/or Kuzey Yeminli Mali
Müşavirlik A.Ş. disclaim any responsibility in respect of the information and explanations in the article. Please be advised to
first receive professional assistance from the related experts before initiating an application regarding a specific matter,
since the legislation is changed frequently and is open to different interpretations.