National Bank gains more control over foreign exchange operations: government decision
5 January 2025 08:23
The Cabinet of Ministers of Ukraine has adopted amendments to the decree that expand the powers of the National Bank to establish exceptions to foreign exchange transactions. This was announced by the permanent representative of the Cabinet of Ministers in the Verkhovna Rada Taras Melnychuk, "Komersant Ukrainian" reports
Changes have been made to the annex “List of goods and (or) sectors of the economy for which the National Bank has the right to establish exceptions and (or) features of the introduction of a protection measure” to the Cabinet of Ministers’ order of February 13, 2019 No. 76.
The NBU now has the right to establish exceptions and peculiarities for
- introduction of deadlines for settlements for export and import of goods for the purposes of a production sharing agreement,
- providing services for the organization of natural gas transportation through the territory of Ukraine to non-residents.
This will allow for proper currency supervision of transactions.
Currency restrictions imposed by the NBU in wartime
As of September 10, 2024, the National Bank of Ukraine amended the existing currency restrictions. On the one hand, the NBU eased a number of restrictions, and on the other hand, it took measures to counteract unproductive capital outflows from Ukraine.
Among the areas that have changed are:
- purchase and transfer of foreign currency to cover carbon dioxide emissions.
State-owned enterprises may purchase foreign currency and transfer it to non-residents to purchase allowances to cover or offset carbon dioxide (CO₂) emissions associated with aviation activities.
- payments under transactions stipulated by a reinsurance agreement concluded with foreign nuclear insurance pools.
The amendments provide for the possibility to make all necessary payments under reinsurance agreements concluded with foreign nuclear insurance pools (in addition to reinsurance premiums or payments already allowed today). In particular, to pay a break-even bonus, which is a mandatory condition specified in the reinsurance agreement.
- purchase and transfer of foreign currency by resident legal entities that are e-commerce entities to pay VAT in the EU.
The NBU has allowed e-commerce entities to purchase and transfer foreign currency abroad to pay VAT on transactions involving the purchase of goods from Ukrainian producers by consumers from EU countries. The condition for these transactions is that the e-commerce entity must be registered as a taxpayer in the EU. This mitigation will primarily support small and medium-sized businesses, which will be able to promote their goods on the EU market through trading platforms.
- reimbursement of coupon payments on Eurobonds.
In addition to the existing opportunities introduced in May and July, the NBU has allowed businesses to reimburse coupon payments on Eurobonds paid from February 24, 2022 to July 09, 2024 (inclusive). These transactions will only be allowed to be carried out by companies that have no cases of pending currency supervision of exports of goods during the 12 months preceding the date of the transaction.
Tightening of currency restrictions
The new restrictions apply to cross-border payments using payment cards issued by Ukrainian banks to foreign currency accounts to pay for a number of goods and services, including
- watches
- jewelry, etc,
- silver jewelry
- precious stones, etc,
- coins, etc. abroad.
The NBU has set a monthly limit of UAH 100 thousand in equivalent for payments abroad made using payment cards opened by Ukrainian banks to foreign currency accounts, for transactions with merchant codes 5094 (precious stones, metals and jewelry), 5944 (watches, jewelry and silverware) and 5972 (coin and stamp shops).
This limit is in line with the general limit set by the NBU for payments abroad by payment cards issued by Ukrainian banks to national currency accounts.
A monthly limit of UAH 500 thousand in equivalent has been established for payments abroad made using payment cards issued by Ukrainian banks to foreign currency accounts for transactions with the merchant code 6513 (real estate agents and managers). Transactions with this code are used to pay management fees, accommodation fees and related commissions. The limit of UAH 500 thousand takes into account the needs of Ukrainians who are outside Ukraine or traveling abroad and meets the needs of 98% of bank customers who carry out these transactions.
