Yes, the translation circuit has a range
According to the wiki:
On yet another occasion, the Seventh Doctor told Elizabeth Klein that
the telepathic field was limited to a certain radius around the
TARDIS, with the Doctor losing the ability to communicate with the
native Vrill in its absence, although this can be attributed to the
fact that the Vrill communicated via smell and hence the Doctor would
be unable to even attempt to speak it on his own.
This occurred in the audio adventure Survival of the Fittest. Transcribed from the episode:
DOCTOR: The TARDIS has a special translation ability, remember. It makes all languages intelligible within a certain radius around it.
And if the TARDIS leaves that range:
DOCTOR: The moment the TARDIS leaves this continuum, the gift will be revoked.
KLEIN: The what?
DOCTOR: The translation! There will be no more translation. Vrill and humans will be unable to communicate. Stefan or some fool like him will just repeat the cycle all over; the treaty will lost!
Note that in this case the TARDIS would be distant in time, as well as space, and possibly in a parallel timeline to boot.