Ukrainian system of currency regulation finds a new lease of life

More than 25 years of horse and buggy rules on the Ukrainian system of currency regulation full of contradictions and fragmentarity found a new lease of life in June 2018. On the 21st June 2018 the Ukrainian Parliament has adopted the Law “On Currency and Currency Operations” No 2473-VІІІ, (hereinafter – the “Law”). The Law was officially published on 07 July 2018 and became applicable on 07 February 2019.

To implement provisions of the Law the National bank of Ukraine (hereinafter – the “NBU”) has enacted seven decrees that will constitute the basis of the currency regulation system and are also applicable since 07 February 2019. The central principle introduced by the Law reads: “everything not directly forbidden is allowed.” The key idea is almost opposite towards what was in practice in past.

The crucial novelties of the new legislation can be summarized as follows:

  • The Law introduces a principle of freedom in currency operations.

  • Currency laws will not regulate the operations involving securities and their derivatives as they are no longer considered as currency valuables.

  • No licenses are to be received from the NBU for purchasing equity interests in foreign legal entities, opening accounts with foreign banks, purchasing securities of foreign issuers and acquisition of currency valuables abroad.

  • Loan agreements with non-residents will not be registered in the NBU; instead the servicing banks will be required to notify the NBU of the respective loan agreement transactions.

  • The Law eliminates necessity of the currency transactions connected with the import or export of goods under 150 kUAH to be subject to currency control.

  • The operations with currency that overflow the verge set for financial monitoring are subject to currency monitoring.

  • The time limits set out for settlements under export and import transactions are increased to 365 days.

However, the decrees of the Law and NBU preserve certain existing limitations, in particular:

  • The restrictions concerning the repatriation of the capital: the repatriation of dividends paid abroad in foreign currency in the amount of 7 million euros per month, the repatriation of investments (sales of non-listing shares and corporate bonds) - in the amount of 5 million euros per month;
  • Prohibition to purchase currency without commitments under foreign economic contracts or for loan funds;
  • The requirement of the mandatory sales of the export receipts in foreign currency in favor of legal entities in the amount of 50%.

The Currency Law of Ukraine objectifies the country’s ambitious currency market development vision aiming to make it more attractive and investor-friendly. The positive trends in the currency control liberalization are assertative indications of the following successful adoption of the Law.

Operating within the Ukrainian environment the Moore Stephens-Kyiv team is ready to provide the Companies with independent advice on the prudent application of the Law. Our profound knowledge of the market together with the access to the corporate data of the International MS Network assure our Clients that all the aspects of their business affairs are covered with the up-to-date solutions. Read more on how the Moore Stephens-Kyiv team can become your right hand in the fast-paced commercial world http://www.moorestephens.ua/services?lang=en-gb