Exultation of Ukrainian business: wave of currency liberalization
The beginning of 2019 was marked not only by the rapid strengthening of hryvnia and the fall of dollar, but also by the entry into force of the Law On Currency and Foreign Exchange Transactions of February 7. Earlier, the currency sphere was regulated by the outdated Decree of the Cabinet of Ministers of Ukraine On the System of Currency Regulation and Currency Control of 1993. This Decree declared the need to obtain individual licenses for remittance to accounts in foreign banks, for the acquisition of corporate rights (as part of the registration of companies abroad).
Orientation on liberalization of currency movements
Starting in 2017, the NBU headed for the liberalization of currency movements of the population, and allowed to open accounts in foreign banks without obtaining a license in cases where there is no transfer of funds from Ukraine.
Now the Law on Currency and Currency Operations establishes the right of individuals and legal entities to open accounts in financial institutions in other countries, the right to acquire currency values and assets abroad, the right to move currency values across the customs border of Ukraine. Non-residents also received the right to open accounts with Ukrainian banks and conduct currency transactions through them.
The requirement to declare an amount equal to or more than 10,000 Euros when going abroad has not changed
Changing the order of the addends does not change the sum. If you wanted to transfer a certain amount abroad to your personal account in a foreign bank from your account in a Ukrainian bank, or for investments, the purchase of shares before, it required an electronic license from the NBU to make such a payment in the amount of 50,000 EUR per year. Now, the system of individual licenses has been abolished by the law, and a system of e-limits has been introduced. This means that an individual can make such payments for placing on foreign accounts for NON-business purposes at the amount not exceeding 50,000 EUR per year.
For legal entities, a limit has been set on the transfer of funds in the case of non-trading operations (for example, investments abroad) in the amount of not more than 2,000,000 EUR per year. Operations within these limits for individuals and legal entities should be coordinated by your service bank with the NBU prior to their execution. So as you can see the name has changed, but the essence remains the same.
Advantages of currency liberalization
At the same time, the undoubted advantage of all innovations are the following possibilities:
- conduct currency exchange transactions online, in ATMs and terminals
- currency control will take place on transactions over UAH 150,000.
This means that working with currency will become a little easier and you can breathe in some fresh air.
But it is worth paying attention to the point that unconditionally such liberalization actions will soon entail the adoption of a package of Laws, which will contribute to increasing control over taxation and all foreign flows of Ukrainian residents. In particular:
- tax rules for controlled foreign companies;
- reporting rules by countries for international groups of companies;
- rules for limiting expenses on financial transactions with related parties;
- taxation rules for a permanent representative office;
- actions to prevent abuse due to the application of treaties on the avoidance of double taxation;
- dispute settlement procedure with respect to the application of conventions for the avoidance of double taxation;
- issues of introduction of international standards for the automatic exchange of financial information
This means that even greater changes are coming in the Ukrainian legislation, which will affect everyone without exception. Therefore, it is important now to keep abreast, prepare for the new rules and be fully armed.
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Good luck!
CEO Finevolution