Business facilitation: currency relaxations from NBU

Business facilitation: currency relaxations from NBU

The National Bank Of Ukraine continues the policy of business facilitation and improvement of the investment climate, as provided by the roadmap for currency liberalization. In general, since the beginning of the year, the National Bank has already abolished more than 30 restrictions on the foreign exchange market. Currency liberalization will continue in line with the pace of improving the macroeconomic situation. Its ultimate goal is the free movement of capital.

Repatriation of dividends

The limit on repatriation of dividends has been finally cancelled.

Starting from July 10, 2019, a business with foreign capital is no longer limited to the restrictions on the transfer of dividends abroad or to accounts of non-residents in Ukraine at the rate of 12 million euros per month for one legal entity.

NBU informs that such a currency relaxation will not have negative consequences for macro-financial stability. In the first half of the year, businesses transferred abroad US 1.27 billion worth dividends, US1.07 billion of which were transferred at the expense of the purchased currency. Such volumes of currency transfer and purchase are 20% and 14% less than for the same period last year.

The mentioned changes regarding the repatriation of dividends were approved by the Resolution of the Board of the National Bank No. 91 dated July 9, 2019, “On Amendments to Certain Legislative Acts of the National Bank of Ukraine”. It came into force on July 10.

Sale of foreign currency earnings

The NBU abolished the requirement for the mandatory sale of foreign currency earnings.

The provision, which obliged entrepreneurs to sell 30% of foreign currency earnings on the interbank foreign exchange market, ceased to apply from June 20, 2019.

Another currency relaxation will not have negative consequences for macro-financial stability. According to statistics of recent years, when the mandatory sale of foreign exchange earnings was 50% and then reduced to 30% from March 1, 2019, the business generally sold more than 90% of the currency.

The amendments specified were approved by the Resolution of the Board of the National Bank No. 78 «On Amendments to the Regulation On Safeguards and Procedures for Certain Transactions in Foreign Currency» dated June 18, 2019.

Terms of payment for a number of export-import operations

The NBU has simplified currency oversight of the compliance with the deadlines for payments for the export of works, services and intellectual property rights, as well as a number of export and import operations, which are important, in particular, for ensuring the state defence capability, proper access of Ukrainians to medical services and the development of aviation- space building.

From now on, the time limits for settlements for foreign economic operations (for today – 365 days) will not be applied to the following:

  • Import of goods under state contracts for defence orders;
  • Import of services or medicines under the agreements of the Ministry of Health of Ukraine with specialized organizations, as well as the import of services for the treatment of people with rare (orphan) diseases;
  • Import of goods used for the production of space and aircraft equipment and aggregates;
  • Export-import of goods in the framework of production-sharing agreements;
  • Export of works, services (except transport and insurance services and works) and intellectual property rights.

Simplification of currency oversight of the above- specified operations was carried out taking into account the order of the Cabinet of Ministers of Ukraine No. 76-r dated, February 13, 2019, and consultations with the Ministry of Economic Development and Trade.

In addition, the NBU permitted banks to complete currency oversight of business in regard to compliance with deadlines for payments for exports of goods after transferring of funds by a letter of credit.

The  amendments specified were approved by the Resolution of the Board of the National Bank No. 67 “On the establishment of exceptions and/or peculiarities of the deadline implementation for payments for export and import of goods and amendments to certain legal acts” dated May 14, 2019. They came into force on May 16, 2019.