Main changes in currency regulation of settlements in import-export operations
The Law of Ukraine “On Currency and Currency Transactions” entered into force on February 07, 2019 together with eight National Bank of Ukraine resolutions which are now the basis of the new system of currency regulation. We have reviewed below the main changes introduced to settlements in operations of import-export of goods, work and services (hereinafter collectively referred to as “goods”).
In particular, the Law of Ukraine “On Settlements in Foreign Currency” providing that settlements in import-export operations should be completed within 180 days has been repealed.
National Bank of Ukraine Board Resolution No. 5 dated January 02, 2019 approving Regulation on the List Of Safeguard Measures and Procedures For Certain Transactions in Foreign Currency sets out that settlements in import-export operations should now be completed within 365 calendar days. In other words, twice more than was previously provided by law. The period for payment of debt in import transactions with residents is calculated from the date of prepayment, and in export transactions from the date of customs clearance of goods. In case of export of work, services, intellectual property and/or other property rights, the period for payment of debt is calculated from the date of issuance of act, invoice or other document confirming their provision on payment terms after delivery/provision.
National Bank of Ukraine Board Resolution No.7 dated January 02, 2019 Approving the Procedure for Foreign Currency Bank Supervision Over Compliance by Residents with the Settlement Deadlines in Goods Import-Export Operations regulates the application of new deadlines also to unfinished transactions for import-export of goods under which banks have ascertained no breach of settlement terms up to February 07, 2019.
Significant relief will also be brought about by another rule which provides that currency supervision over residents’ compliance with settlement deadlines in goods export operations with residents is to be performed only by the bank which has received the register of customs declarations containing information about the transaction under review. This abolition of double control shall make it easier and significantly quicker for companies to liaise with banks when they enter into import-export operations.
Banks are also to cease currency supervision over residents’ compliance with deadlines for settlements particularly if the amount of outstanding settlements for export or import of goods does not exceed an insignificant amount of UAH 150,000 (about EUR 4,900). This rule does not apply in case of operation split, i.e. when the supply of goods under an export operation is artificially divided by one resident with one counterparty under a contract, and the amount of each operation is insignificant although the amount of operations per calendar month exceeds the aforementioned insignificant amount by tenfold.
The liability for non-compliance with settlement deadlines has also been relaxed. Before adoption of changes such violation could result in the temporary suspension of the foreign economic activity but from now on this type of liability has been abolished.
In view of the above, we can note that the regulation of settlements in currency for import-export operations has been significantly improved and liberalized and that certain rules are still relevant and should be taken into account, in particular, as far as operation split is concerned. Import-export companies should also pay close attention to the determination of limits up to which it is possible to simplify their activity and document collection.
Drawing from its extensive experience in legal and accounting support of foreign-economic contracts, Accountor Kyiv would be happy to assist with any related matters.