Kyiv Post Legal Quarterly - - Contents -

On June 21, 2018, the Verkhovna Rada of Ukraine adopted the Law of Ukraine "On Cur­rency and Cur­rency Op­er­a­tions," which is aimed at lib­er­al­iz­ing the Ukrainian cur­rency con­trol sphere. The adop­tion of this law has been highly pub­li­cized by the gov­ern­ment. Em­pha­sis has been placed on the pur­pose of law be­ing to al­most com­pletely elim­i­nate bu­reau­cratic im­ped­i­ments in this sphere and give busi­ness the op­por­tu­nity to use for­eign cur­rency freely for a long pe­riod. But is that re­ally the case, and what in­no­va­tions does the law ac­tu­ally bring? Despite the de­clared lib­eral prin­ci­ples for the im­ple­men­ta­tion of cur­rency op­er­a­tions in para­graph 2 (which al­legedly in­cludes the right to con­clude agree­ments and im­ple­ment them in for­eign cur­rency), the law still stip­u­lates the hryv­nia as the only pos­si­ble law­ful cur­rency for use on the ter­ri­tory of Ukraine. Set­tle­ments in for­eign cur­rency are ac­cepted only in the fol­low­ing cases: 1) Trans­ac­tions for the im­ple­men­ta­tion of for­eign in­vest­ments and re­fund­ing rev­enues to a for­eign in­vestor (in­clud­ing div­i­dends), and other in­come ob­tained on le­gal grounds as a re­sult of im­ple­ment­ing for­eign in­vest­ments; 2) Trans­ac­tions by banks pro­vid­ing bank­ing and other fi­nan­cial ser­vices based on a re­spec­tive li­cense; 3) Trans­ac­tions to pro­vide cer­tain fi­nan­cial ser­vices by non-bank­ing fi­nan­cial in­sti­tu­tions and postal com­mu­ni­ca­tion op­er­a­tors that have ob­tained a li­cense from the Na­tional Bank of Ukraine for cur­rency op­er­a­tions; 4) Trans­ac­tions for a prospec­tus, the pay­ment of mone­tary in­come and re­fund­ing of bonds, trea­sury bonds of Ukraine nom­i­nated in for­eign cur­rency, if so pro­vided by the prospec­tus for the se­cu­ri­ties (its prospec­tus). 5) Trans­ac­tions on the pur­chase of gov­ern­ment se­cu­ri­ties nom­i­nated in for­eign cur­rency, if the ini­tia­tor or re­ceiver in such a cur­rency trans­ac­tion is a bank; 6) Other trans­ac­tions de­fined by the Cus­toms Code of Ukraine and (or) reg­u­la­tory le­gal acts of the Na­tional Bank of Ukraine. An in­ter­est­ing fea­ture of the new reg­u­la­tions is that the law does not re­quire that in­di­vid­ual li­censes be ob­tained for the trans­ac­tion. The­o­ret­i­cally, in other words, it will be pos­si­ble to freely carry out all trans­ac­tions not stip­u­lated in the ex­cep­tions in for­eign cur­rency, with­out the need to ap­ply to the Na­tional Bank of Ukraine for a li­cense. An­other sig­nif­i­cant in­no­va­tion is that in­di­vid­u­als and le­gal en­ti­ties will be able to open an ac­count with a for­eign bank. To­day, this re­quires an in­di­vid­ual li­cense from Na­tional Bank of Ukraine. On the one hand, this will stream­line trans­ac­tions for com­pa­nies that dy­nam­i­cally main­tain ex­change pay­ments thought ac­counts out­side the coun­try. In such case, on the other hand, it is un­clear how the Na­tional Bank of Ukraine and banks are go­ing to im­ple­ment cur­rency con­trols and fi­nan­cial mon­i­tor­ing. Un­for­tu­nately, the law pro­vides no an­swer to this ques­tion. Among the most sig­nif­i­cant changes in the sys­tem of cur­rency reg­u­la­tion, it should be pointed out that there will be a change of ap­proach to the es­tab­lish­ment of the terms for the re­turn of prof­its for ex­port-im­port trans­ac­tions. From now on, the Na­tional Bank of Ukraine be­sides es­tab­lish­ing ex­cep­tions and re­spec­tive terms for spe­cific goods and trans­ac­tions, can also es­tab­lish a trans­ac­tion size bound­ary min­i­mum, above which term re­stric­tions on ex­port-im­port trans­ac­tions could be ap­plied. This should elim­i­nate the need for con­fir­ma­tion of goods/ser­vices de­liv­ery for small trans­ac­tions and pur­chases made abroad. It should be men­tioned that cur­rent re­quire­ments make a va­ri­ety of ser­vices pay­ments more dif­fi­cult, par­tic­u­larly, in the sphere of the in­ter­net, since all pay­ments re­quired the sign­ing of for­mal agree­ment and the pe­ri­odic sign­ing of cer­tifi­cates of ac­cep­tance and trans­fer. More­over, the law it­self does not con­tain rules in this re­gard, leav­ing the de­tails of reg­u­la­tion to the dis­cre­tion of the NBU. Which terms the NBU will set, and whether it will take ad­van­tage of the op­por­tu­nity to lib­er­al­ize the norms pro­vided by the law, re­mains in ques­tion. In fact, be­fore the adop­tion of such reg­u­la­tions by the NBU, which will flesh out the in­ter­pre­ta­tion of the law, it is hard to pre­dict how the new leg­is­la­tion will in­flu­ence busi­nesses – apart from the fact that they will gain the right to open an ac­count abroad.

Dr. Alexey Kot, Man­ag­ing part­ner of An­tika Law Firm

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