New currency control system in Ukraine

On January 4, 2019, the National Bank of Ukraine (NBU) adopted a list of new regulations supporting the new law “Currency and currency transactions” which came into effect on July 6, 2018.

The overall purpose of the new legislation is to build a clear and transparent currency control system in Ukraine, which is devoted to improving and simplifying routine processes for cross-border trade, import/export, loans, and related transactions. It will also make the system less constrained by government oversight and more liberal for all.

New approaches for currency controls

New approaches for currency controls have been developed for each particular aspect of international business activity and are introduced as a set of regulations as follows:

  • Regulation on the currency market structure, terms, and procedure for trading in foreign currency and investment metals on the Ukrainian currency market.
  • Regulation on transactions with foreign currency assets.
  • Regulation on the cross-border movement of foreign currency
  • Regulation on a general list of protective measures, criteria, and procedures for their implementation, extension, and early termination.
  • Regulation on protective measures and determining the procedure for certain foreign currency
  • Regulation on the procedure of providing the information on contracts regarding the fulfilment of debt obligations by residents to non-resident creditors under the loans by banks to the NBU.
  • Instruction on the procedure of currency control for meeting settlement deadlines under export and import operations.
  • Regulation on the procedure for conducting analysis and verification of documents (information) on foreign currency transactions by authorized bodies.

The main features of the new currency control regulations

The main features of the new currency control regulations we want to highlight:

  • Extension of the time limit for settlements under export-import transactions from 180 to 365 days
  • Cancelation of financial controls for export-import transactions less than UAH 150,000
  • Cancellation of registration requirements for cross-border loans with the NBU
  • Non-resident legal entities are allowed to open standard bank accounts with Ukrainian banks and use them for commercial activity in Ukraine
  • Introducing an automated system of e-limits instead of individual licenses for certain foreign currency operations
  • Cancellation of the licensing requirement with the NBU for investment abroad, to opening and operate bank accounts in foreign banks.

Steps to improve the Ukrainian investment climate

Steps to improve the Ukrainian investment climate taken by the NBU by further reducing the restrictions imposed on cross-border transactions:

  • Mandatory exchange of revenue in foreign currency to be decreased from 50% to 30%, starting March 1, 2019.
  • Dividend distribution limits are to be abolished. Currently, they are limited to EUR 7 million per month.
  • Restrictions on early repayment of cross-border loans are to be abolished.

While the NBU reserves the right to implement restrictive measures depending on the status of the Ukrainian economy, which remain partially effective so far, the new currency control rules in Ukraine will provide many benefits and opportunities for foreign investors. Both local and international companies with business in Ukraine will be carried out under the principles of clarity and transparency and with minimal government oversight. This will be mutually beneficial and become an effective engine for the gradual recovery of the Ukrainian economy and will strengthen Ukraine’s position in the international arena.

How can SCHNEIDER GROUP help?

Should you have any additional questions regarding the new foreign currency control rules, SCHNEIDER GROUP’s legal experts will be glad to assist and support you with the practical applications of the new legislation.

Our free Quarterly Focus event on “New regulatory framework from the National Bank of Ukraine” will be held in SCHNEIDER GROUP’s Kyiv office on March 26. There, you will have the opportunity to learn more about the introduction of the new currency market regulations in Ukraine and banking oversight of foreign currency transactions. We hope you visit our event! Registration is open until March 25!

You can register for the event here: https://schneider-group.com/events/https-schneider-group-com-events-new-regulatory-framework-from-the-national-bank-of-ukraine/

Get in touch with our experts in Ukraine
Artem Barinov
Associate Director, Legal & Tax
+380 / 44 / 490 55 28
Maksim Satsyuk
Legal Expert
+380 / 44 / 490 55 28