Since February 7, 2018, comes into force the new Law of Ukraine “On Currency and Currency Values.” Having determined the principles of currency transactions in Ukraine, the main innovation of this law is the abolition of individual currency licenses and the provision of the opportunity for Ukrainian citizens to buy foreign currency online, in particular, to invest abroad.
The National Bank has already provided a draft structure for currency regulation and noted that the new regulatory framework will be simple, transparent and affordable. The system itself consists of seven key regulatory acts in the field of currency regulation, which cover issues of the structure of the foreign exchange market, the rules of foreign currency trade and banking metals, the procedure for calculations, operations of buying and transfer of foreign currency to and beyond the territory of Ukraine, and a list measures aimed at the protection and defense of such cross-border operations.
In particular, the currency regulation provided for by Law No. 2473-VIII allows individual persons and legal entities to enter into agreements with residents or non-residents in national or foreign currency at their own choice of counterparties, to purchase foreign currency values, assets abroad, to transfer them across the customs border of Ukraine, as well as to open accounts in financial institutions of other countries without first obtaining any permit document, passing only standard identification in the bank. Instead of them comes the system of electronic limits. Prior to that, these operations required an individual NBU license, which could be refused by the central bank of the country.
In addition, citizens of Ukraine received the possibility of cross-border movement of currency values for an amount not exceeding 10 thousand Euros without the written declaration of the value, as well as insuring their lives by making payments in foreign currency. The NBU will control only currency transactions, which in the equivalent exceed 150 thousand UAH.
Extremely interesting new law will be for investors who mainly work with the currency and have great difficulties now. Therefore, the National Bank proposes not to set a deadline for the settlement of export and import transactions, and, accordingly, to cancel the sanctions for failure to comply with the terms that are currently in place. Today the term of export-import payments is 180 days, during this time the currency, for example, for Ukrainian goods sold abroad, should come to Ukraine and is a payment of installments.
The lifting of this restriction improves the competitive position of Ukrainian exporters and importers, reduces the risk of fines and increases the space for agreements between trading partners regarding settlement conditions. Also, exporters will not need to sell foreign exchange earnings, and companies will be able to buy currency without binding to a specific export contract. For the Ukrainian business it is a great opportunity to invest abroad for the purchase of other companies, for the opening of representative offices and expansion of markets. Ukrainian companies will be able to invest abroad in securities, real estate, property rights, import and export securities, provide loans to non-residents, etc.
Basically, the new law is:
- Investing abroad without obtaining individual licenses;
- Supervision over compliance with limitations instead of transaction control;
- Cancellation of the deadline for settlements under foreign economic agreements;
- Registration of loans from non-residents is not required;
- Abolition of sanctions for violation of currency regulation.