RELEVANT LEGISLATION:
- General Custom Communique Serial No.1, In Relation to Land Vehicles Subject to Provisional Import (“the Communique”)
- Custom Law Number 4458 (“The Law”)
- Council Of Ministers Decree (“the Decree”) on Application of Some Articles of Custom Law No. 4458, Dated 2009/15481
Introduction
Entry of foreign vehicles constitute an exception for custom duties under provisional import regime. As in most jurisdictions, these exemptions are provided with the purpose of allowing touristic visits, international trade and transport of goods therefore, the entries are subject to strict criteria, mainly, compliance with duration of stay which is limited for a specified time.
Non-compliance will result in penalties detrimental to the international transportation business.
The aim of this article is to raise some nuances which we believe foreign owners and the foreign leasing companies (financing vehicle purchases) shall be aware of.
GENERAL RULES UNDER PROVISIONAL IMPORT REGIME
Art. 16 of the Decree provide the following criteria that need to be satisfied all at once. These criteria is applicable to all motor vehicles, used for personal or commercial reasons.
- The vehicle must be a foreign registered, plus, owned by a foreign resident person [1]
- Must be used by a foreign resident, subject to specific exceptions
- Must be is used in a transport route that commence and terminate out of Turkey
The term “used” in (b) indicates physical use. For this reason, where the owner and/or the carrier under CMR is a legal entity, proxy deed must be presented to the customs.
ADDITIONAL CRITERIA UNDER THE COMMUNIQUE
As can be seen from the Decree, ownership and usage are inseparable part of the exemptions under provisional import regime in the sense that “foreign registered/foreign resident owned” are the key terms for this regime. This is not written anywhere but the order of the rules makes it very clear.
However, the Decree has an important gap since, in most cases, the owners are legal entities who cannot physically drive, who must employ real person drivers
This gap is filled in by the Communique. Art. 23. of the Communique provides that entry of a vehicle will not be allowed unless;
- A document of ownership is and where the driver is not the owner; a PoA; is presented
- PoA certified by a public notary, embassy or a consulate allowing him to take possession and entry Turkey shall be necessary.
There are two more additional rules provided by the Communiqué.
- A Coverage of insurance policy that cover all areas of Turkey, or a green card insurance where the TR letters are not crossed out.
- Documents presented has to have valid date/valid for Turkey and if they bear alterations, this must bear with proper signatures.
Question: Can a Turkey resident driver enter to and use a foreign vehicle in Turkey?
The answer is yes, but subject to certain conditions. These are provided by Art. 17,18 and 19.
As per Art. 17.: The vehicle must meet (a) and (b) of the preceding Art. 16, (foreign registered/foreign resident owned) and either of.
a) The vehicle is connected to a railway network outside Turkey, used under international treaty.
b) A Trailer or semi-trailer being used with a motor vehicle registered in Turkey.
c) Where it is under personal use purpose
- used in emergency cases only
- the owner is present in the vehicle.
Art. 18 provides further exceptions for the use by Turkey residents, these are limited to personal use purpose only.
- A vehicle must be foreign registered /foreign resident owned
- Used for personal purpose only,
- Consent of the entry right holder is provided
- Used in compliance with Art. 19 (3),
- The use is not continuous
- The entry right holder remains in Turkey.
Art. 19 (3) provide further detailed rules, and also expands the exceptions to commercial use by Turkey residents
- The vehicle must have been brough by a foreign resident for either personal or commercial use
- Must meet (a) and (c) of Art. 16 (*foreign registered/foreign resident owned)
- The use shall not be continuous
- Purpose of personal use shall be explicitly provided in the service agreement [2]
- The user (driver) must be employed or empowered by the entry right holder
- For vehicles used for personal purpose, Art. (c) of 16 shall not apply (see above, “the transport route”)
As can be seen there are many challenges to be resolved [3]. An analysis with more depth can be provided on a case-by-case basis.
What is worth to note is that a proxy deed which have an additional statement that the driver is employed or (in our opinion: is hired for the drive) shall be sufficient. Needless to say, such usage cannot be permanent so it is always subject to maximum “duration of stay” which we will touch below, under provisional import regime.
Question: Can a foreign registered truck enter Turkey with an empty trailer on the back?
The Decree does not answer this question. However, in practice, we know that vehicles coming from some EU countries with an empty trailer are allowed entry, subject to providing a carriage contract and other supportive documents to the custom. Note that in such cases there will be no CMR bill of lading available since there is not yet a cargo on the trailer.
DURATION OF STAY FOR FOREING COMMERCIAL VEHICLES
Permitted Duration of Stay under Art. 15 of the Communique is as follow;
- For commercial transport vehicles, 30 days
- For busses of group tour 90 days
- Where a border trade certificate of conformity has been issued by a local governor, up to 15 days
- For vehicles registered on Vehicle Tracking Module No.1; up to 90, namely, these are automobile, minibus, land vehicles, light lorries and motorbikes owned by legal entities.
- Where a custom declaration is presented (e.g., truck with cargo) the time allowance in the declaration shall apply
Tip 1: In addition to the above, Art. 18 of the Communique provide that the relevant custom authority shall monitor the exit of vehicles on the system for 4 months after which the Custom General Directorate is being notified, which triggers custody. When the vehicle is caught during the exit it shall take to custody until collection of the penalty. Interestingly, this may in effect be construed to provide an implicit extension of 4 months.
Tip 2: Foreign truck owners shall also be aware that although it is not a written rule, exit of the driver without the vehicle after the permitted duration of stay , shall be construed as prima facia evidence of that the provisional import regime is breached. The entry is granted for that specific driver so he should not leave the country without the vehicle unless before the end of the duration of stay.
WHAT HAPPENS IF THE COMMERCIAL VEHICLE DOES NOT EXIT TURKEY WHITIN THE DURATION OF STAY?
Art. 17 of the Communique provides time extension request where reasonable causes can be shown. In the absence of a time extension, a vehicle benefiting under this regime, must exit Turkey within the allowed duration of stay.
Otherwise, the provisional import is transformed to absolute import which means that the vehicle whenever it is caught shall be held in custody for the purpose of applying the import duties which is to two times of the value. (of the truck and trailer). The vehicles can only be allowed to exit Turkey after payment of the custom fines, which are usually decided upon import tariffs.
THE ISSUE WITH STOLEN VEHICLES
Art. 30 provides an important exception for stolen vehicles whereby submission of a police report, public prosecution record or a court decision is required. However, the custom authority is provided with quite wide discretion on evaluating the authenticity of the claim since the Communique uses the term “proven theft”
We believe that an important distinction need be made for vehicles stolen, before and after entry to Turkey.
- After the entry to Turkey, a complaint by the person possessing the vehicle (namely the driver) shall be deemed sufficient unless he is the suspect. In the latter case, a filing by the owner or logistic company shall be sufficient.
- Whereas before the entry to Turkey, naturally, the vehicle can only be stolen in a foreign country, therefore, criminal filing in a foreign jurisdiction with proper documentation shall be needed.
However, there is an issue that is much more complicated: The time of criminal filing.This is extremely litigious issue.
If the time of filing is before the elapse of the duration of stay for provisional import, it is much easier for custom to grant authenticity of the claim. In other cases where the criminal filing is made after elapse of the duration of stay, it is quite difficult to convince the custom authority.
This is because, the custom authority will tend to consider such claims as circumventing the provisional import regime. It is apparent that the custom authority will be much more forensic and tend to leave the issue to be decided by administrative courts. We believe that this can be reasonable only when we talk about a logistic company or a truck owner since they are deemed to know the whereabout of their vehicle. In such cases convincing reasonable cause shall be shown for delay in criminal filing.
It is also evident that the situation is quite different when the owner is a foreign financial leasing company. As is known, registry certificate indicating that the owner is a leasing company is a clear message that the legal owner is not in possession. The possession is held by a lessee or a logistic company.
In our view, the custom authority must seek a PoA certified by a public notary, embassy, or a consulate before rejecting the claimant who procure “a criminal filing”. It is the custom directorate duty to seek PoA for allowing entry to Turkey in the first instance. In the absence of PoA, a simple statement by a foreign financial leasing company regardless of the time, shall be sufficient to qualify a document proving theft [4]
LIABILITY FOR BREACH OF PROVISONAL IMPORT RULES?
- If the vehicle has entered without cargo, e.g., to pick up cargo from Turkey, then the registered owner is penalized and in addition, the driver is also penalized under the contributory negligence rules of Misdemeanour law.
- Whereas for vehicles entering with cargo, it would be the Entry Declaration holder or The Undertaking Letter Provider benefiting from the provisional regime.
Let us point out again that in our view, a foreign financial leasing company cannot be penalized unless the Custom prove a valid and lawful entry to Turkey by producing PoA issued by the leasing company in the name of a foreign resident driver since the “intention” criteria will absent for leasing companies under the Misdemeanour Law.
ISSUES TO BE CONSIDERED BY FOREING COMMERCIAL VEHICLE OWNERS
In cases where a foreign vehicle is rented/leased whether by a leasing company or by a truck owner to a logistic company and the provisional import regime is breached, whenever the vehicle found, it will be taken to custody until the custom fines are fully paid.
This can cause harm to the cargo owners and result in liability of logistic companies under CMR convention.
As provided above, PoA is issued in the name of driver, which relied upon by the custom authority is the only remedy to available to the owners (leasing company or other truck owners)
Leasing contracts between owners and logistic companies shall provide clear distribution of responsibility to avoid unnecessary litigation between these parties. The PoA issue need to be defined in line with a degree of protective measures for owners, in cases of imposing custody and confiscation at worst.
WHAT HAPPENS WHEN THE TRUCK AND TRAILER ARE OWNED BY DIFFERENT PERSONS?
Unfortunately, there are no published case law awailable on this issue either.
We believe that when the foreign vehicle entering Turkey carries cargo, the Entry Declaration or The Undertaking Letter mechanism shall at least allow the custom authority to notice any ownership discrepancy and perhaps shall not allow the vehicle unless the declarations include the truck plus the trailer plate numbers. In such cases, the owners are provided by a protective measure as the Communique seem to impose the fine upon the logistic company, rather than the owners, or at least this is how we perceive it from the legal texts.
Whereas the issue is more problematic when the vehicle enters Turkey with an empty trailer. e.g. to pick up a cargo from Turkey. In such cases, the custom checks the ownership certificates and in the Vehicle Tracking Module there is only one field of for ownership, therefore the trailer is recorded under the ownership of the truck. There is no storage of documents mechanism. We cannot comment further on that, but we have a litigation case particularly on that issue. We may share our opinion as soon as a final judgement is available.
For the time being, we believe that no person can be penalized for a property of other person unless it is proved that he is meant to be a lawful possession of that property. Otherwise, this practice does not have a legal base and is an issue for potential administrative litigation.
In our view, in such cases the owners cannot be penalized since neither the truck, nor the trailer alone can constitute a commercial transport vehicle. Breach of provisional import cannot be committed only by the truck or trailer alone due to presumption of solidarity rule (you cannot talk about commercial transport vehicle unless both pieces lawfully used together). It would follow that a penalty cannot be imposed on the truck owner unless he has consented for the trailer to attached to his truck.
CONCLUSION
Provisional Import Regime for Foreign Vehicles is a rarely explored area in terms of administrative case law but its importance is fundamental for non-Turkey based logistic companies. When making contractual arrangements, it is advisable taht the complexity of the law and the secondray legislation is taken into account perhaps with a good degree of protective & surveillance measures.
What is worth to note is that, at the end of the day, custom laws are specific type of tax Law which requires that any tax liability shall be based upon explicit administrative law provisions. That's not all. Additionaly, any tax related punitive liability shall comply with the very basic principles of Misdemeanour Law. Punitive decisions shall be evaluated in the light of cumulative provisions law and perhaps the gaps can only be filled in by case law. For this purpose, increasing awareness is needed to spot a rightful legal argument that may serve a meaningful administrative case.
In the absence of insufficient case law, it is always difficult to predict outcome of a potential dispute between the custom administration, nevertheless, we hope that the issues discussed in this article may shed a light on some litigious issues, before they arise.
For more information: yusuf.gumus@ygumus.av.tr
[1] Person means real and legal person and the term “residency” is wider than nationality, which is easier to satisfy. The issue of dual residencies is not defined. We take the view that a person who is “resident in Turkey” is not what the lawmaker intended and that he may not fulfil the criteria.
[2] We can take that to imply “between the right holder and user”
[3] E.g. what is meant by the terms “entry right holder”, “continues use”, “personal purpose”, “service agreement” and how we show employment or empowerment?
[4] There is a current administrative litigation case which we hope to become a precedent