Facilitating doing business in Ukraine - a new wave of legislative liberalization.

On 18 June, Tuesday, the National Bank of Ukraine (the “NBU”) cancelled the mandatory sale of 30% of foreign exchange earnings on the interbank foreign exchange market by the enterprises. These adjustments were approved by the NBU Board Resolution No. 78 ‘On Amendments to the Regulation on Safeguards and Procedures for Certain FX Transactions’, dated 18 June 2019.
The law becomes effective on 20 June 2019.
The NBU Press Service reports: “In order to facilitate doing business in Ukraine, the National Bank abolishes the requirement for mandatory sale of foreign exchange earnings.”
“All the revenues of the enterprises, that were credited to their distribution accounts during 19 July, will no longer be subject to mandatory sale,” – specified the regulator.

According to statistics of recent years, despite the requirements of the mandatory sale of foreign exchange earnings, the enterprises usually sell about 90% of the currency. The NBU is convinced that another wave of legislative relief will not have any negative consequences for macro-financial stability of the country.

This is another important step taken by the NBU to set forward the currency liberalization according to the road map for cancelling all FX restrictions (see Picture 1 below).

During this year, the NBU has already either cancelled or softened more than 30 currency restrictions. So, in line with the main strategy of the NBU, abolition of compulsory sale of foreign exchange earnings is a further step towards the free movement of capital defined as one of the strategic goals of the NBU.

Our expert’s opinion:

“Over recent years the National Bank of Ukraine (NBU) has been softening the threshold amounts of mandatory sales of FX earnings: from 75 per cent (in 2016) to 50 per cent (in 2017) and then up to 30 per cent at the beginning of the year 2019. Thus, the FX transactions with foreign counterparties have been gradually eased for Ukrainian companies. The complete cancellation of mandatory sales of FX earnings is another important step towards liberalization process for the foreign market in Ukraine. This positive strategy of the NBU facilitates the free capital turnover, opens up new vistas for foreign investors and simplifies the doing business process in Ukraine.”

Anna Demchenko
Manager, Tax and Legal