Starting from 7th of February 2019, new Law of Ukraine “On Currency and Currency Transactions” comes into force. It implements long-awaited currency reform in Ukraine and a new core principle of performing currency transactions: what is not prohibited, it is allowed. As a result, it is expected significant simplification of currency transactions, cross-border loans, cancellation of big number of current currency control restrictions and limitations as well as significant simplification of cross-border payments and investment in and out of Ukraine.
As per the above Law, the National Bank of Ukraine (NBU) may exercise certain powers within limits as defined by law, including on as needed basis to introduce temporary protective measures (for up to 6 months). Additionally, the NBU is authorized to introduce special procedures for transactions related to movement of capital (among others, “transactions related to movement of capital” include investment in Ukraine, investment overseas by residents of Ukraine, obtaining loans from non-residents etc).
The new law states that the NBU has to adjust its legislative acts to the provisions of the Law of Ukraine “On Currency and Currency Transactions” not later than 30 days before the new law comes into force (roughly – the beginning of January, 2019) and if necessary and as per grounds specified in the new law, to adopt new temporary legislative acts with temporary protective measures.
As part of implementing the new law, on 4th of January 2019, National Bank of Ukraine published 8 draft regulations, which are supposed to come into force on 7th of February (together with the Law) and replace existing 56 regulations of the National Bank of Ukraine, which regulate currency market in Ukraine and are effective at present.
According to these new draft regulations, certain key changes are expected in the currency market of Ukraine:
- registration of loans from non-residents will be cancelled;
- individuals – residents of Ukraine will be allowed to send funds to their accounts overseas or for investment overseas in the amount not exceeding 50,000 EUR per year (before such transaction required obtaining individual license of the National Bank of Ukraine);
- legal entities, registered in Ukraine, AND private entrepreneurs, registered in Ukraine, will be allowed to send funds overseas as part of their business activity in the amount not exceeding 2,000,000 EUR per year (with some exceptions). Among others, exceptions (when limit does not apply) include:
- current foreign currency transactions of legal entities/private entrepreneurs (such as settlements for export & import of goods and services);
- repayment of loan to non-residents;
- payment of investment profit and return of investment to foreign investors;
- some as defined by regulation of the NBU.
- individuals will be able to convert currency online up to UAH 150,000 per day;
- currency control will not apply for currency transactions (such as sending or receiving funds from overseas) for less than UAH 150,000 equivalent (roughly 5,300 USD). This means that servicing bank should not require any supportive documents for performing transactions within such limit (unless such transaction will be considered as “risky” (suspicious) by the servicing ban);
- settlements under export-import agreements should be performed within 365 days (instead of 180 days as it was before);
- ban on preterm repayment of loans to non-residents will be cancelled;
- foreign companies will be able to open bank accounts in Ukraine (before such foreign companies had to open representative office or permanent establishment in order to be able to open bank account with Ukrainian banks);
- individuals will be able to send overseas up to UAH 150,000 equivalent per year without opening bank account (current limit – UAH 15,000 per year);
- investment in Ukraine can be made not only in currencies of 1st group of the National Currency Classifier, but also 2nd group of the National Currency Classifier.
For full list of up-to-date current currency control rules in Ukraine, please refer to our article Current Capital Control Measures in Ukraine. If you have any questions or require assistance, please contact us at info@contactukraine.com