Currency restrictions re-extended
Tax & Legal Alert
7 September 2015
On 03 September 2015, the National Bank of Ukraine (hereinafter, the “NBU”) issued Decree No.581 which came into force on 04 September 2015. Decree No.581 re-extends the key currency restrictions previously imposed by Decree No. 354 dated 03 June 2015.
According to Decree No. 581, the following key restrictions are extended (with certain changes) up to 04 December 2015 inclusive:
- settlement deadline for import and export transactions remains limited to 90 calendar days;
- mandatory sale of 75% of foreign currency earnings (change: the list of exceptions from mandatory sale of foreign currency earnings now includes the funds paid back by a foreign receiving bank/intermediary bank, provided that such funds were repaid within two days from the date of their transfer by the authorized bank);
- tightened control over currency transactions (according to Decree No. 581), the prohibition on discontinuance of supervision over export operations on the grounds of documents confirming the discharge of obligations through the offset of similar counterclaims applies to:
- transactions in foreign currencies included in the first group of the Currency Classifier/RUB, irrespective of the amount of transactions; and
- transactions in other currencies, if the amount of obligations discharged by offset under one contract for export of goods exceeds the equivalent of USD 500,000;
- ban on early repayment of loans, credits (including financial aid) in foreign currency under agreements/contracts with non-residents;
- sale of foreign currency cash to one individual on one business day in one banking institution remains restricted to the equivalent of UAH 3,000;
- foreign currency remittances by individuals from Ukraine abroad remain limited to the equivalent of UAH 15,000 per business day in case of transfer without supporting documents, and to the equivalent of UAH 150,000 in case of remittances made on the grounds of supporting documents;
- prohibition on cash withdrawals within Ukraine by electronic payment instruments issued both by residents and non-residents in any currency other than Ukrainian hryvnia;
- withdrawals of cash in foreign currency or precious metals from the clients’ current and deposit accounts remain limited to the equivalent of UAH 20,000 (previously UAH 15,000) at the official exchange rate of the NBU, per day per client;
- the banks are not allowed to purchase foreign currency in the transactions that involve the importation of products which had been cleared with the customs before 01 January 2014 inclusive, if the debtor and/or creditor under foreign economic agreement were/was replaced. Residents must fulfil such obligations using their own (neither bought nor borrowed) funds in foreign currency. This restriction does not apply to the residents’ import transactions involving the purchase of essential goods;
- the banks should suspend the issue of bearer savings (deposit) certificates; banks are allowed to issue registered savings (deposit) certificates denominated both in the national and foreign currencies, with a maturity of not less than six months;
- the banks’ right to early refund foreign currency deposits (except those covered by savings (deposit) certificates with a maturity of not less than six months) in Ukrainian hryvnias at the forex purchase rate set by the relevant bank as of the date of transaction;
- the banks’ obligation to place funds in hryvnias on a separate analytical account first, and to transfer such funds for the purpose of purchasing foreign currency not until the fourth banking day;
- the banks’ obligation to keep a foreign currency purchase register to be submitted to the NBU. If the requested amount is equal to or exceeds USD 50,000, the banks should submit, along with the register, copies of documents based on which forex transactions are performed. Change: the list of documents to be submitted to the NBU in order to confirm the ability to buy and/or transfer foreign currency from Ukraine no longer contains the Certificate of no arrears issued by the State Fiscal Service of Ukraine;
- ban on the purchase and remittance of foreign currency for the purpose of performing the following transactions:
- repayment of funds to foreign investors abroad following the over-the-counter sale of securities of the Ukrainian issuers;
- repayment of funds to foreign investors abroad following the sale of equity rights other than in the form of shares; any reduction of authorized share capital of legal entities, foreign investors’ withdrawal from business companies;
- payment of dividends to foreign investors abroad;
- transactions performed under the NBU’s individual licenses (Decree No. 581 amended the list of exceptions to include the transactions totaling less then USD 50,000 or the equivalent during one calendar month on the grounds of one individual NBU’s license).
- the banks are not allowed to transfer funds in hryvnias from an investment account for the purpose of purchasing government bonds of Ukraine by a foreign investor (some exceptions apply);
- within one calendar week, a client (legal entity and/or individual entrepreneur) may purchase not more than 3.216 ozt of gold or the equivalent in other bank metals at the same banking institution by bank transfer in hryvnias (some exceptions apply);
- prohibition on granting loans in the national currency, if the clients secure the loans with property rights to foreign currency funds deposited with the banks;
- requirements to confirm the transfers of charitable aid by charitable institutions and the remittances of funds from the Ministry of Health of Ukraine abroad;
- the limit for cash withdrawals through cash desks is UAH 300,000 per day per client;
- the prohibition on the banks purchasing foreign currency on the instruction of resident clients having foreign currency funds on current and deposit accounts opened with the bank in question and/or other authorized banks no longer applies if the total amount of foreign currency funds on the client’s accounts is less than USD 25,000. Change: the list of exceptions now includes the following cases to be disregarded for the purpose of calculating a currency account balance:
- funds on deposit account of the Association of International Road Carriers of Ukraine (AsMAP UA) used for the purpose of fulfilling warranty obligations under TIR Carnet operations;
- funds falling into the third group of the Currency Classifier;
- The rule still applies according to which the NBU does not perform the registration of:
- changes to the agreement on raising a loan/credit in foreign currency by a resident (other than an authorized bank) from a non-resident, if such changes relate to the replacement of creditor and/or debtor in an obligation under such credit/loan agreement;
- agreement on obtaining a credit/loan in foreign currency by a resident from other resident, if the resident creditor assigns the right of claim under such credit/loan to a non-resident.
The National Bank of Ukraine may take individual decisions on the registration in the aforementioned cases, if the debtor(s) and/or the creditor(s) in the relevant obligation are business entities having control relations.
This restriction does not apply: if the original debtor is replaced due to its merger into the new debtor-successor and/or liquidation of the original debtor; to the contracts concluded by residents with international financial organizations, where Ukraine is a member, and to the agreements with international financial institutions, with respect to which Ukraine has undertaken to ensure the same legal treatment as applied to other international financial institutions.