The Decree of the Cabinet of Ministers of Ukraine "On the System of Currency Regulation and Currency Control" (the "Currency Control Decree") is the principal legislative act regulating issues of currency regulation and control. The Decree establishes the regime of currency transactions and deterŽmines the general principles of currency regulation, the authority of state agencies, and the rights and obligations for currency relations.
The Law of Ukraine "On Procedure of Settling Foreign Currency Accounts" establishes rules for export and import operations payment. There are also a number of resolutions of the National Bank of Ukraine regarding currency operations.
The principal state body responsible for currency control and regulations in Ukraine is the National Bank of Ukraine (the "NBU").
The NBU issues individual and general licenses to conduct currency operations which fall within the scope of the licensing requirements of the Currency Control Decree.
General licenses are issued for an indefinite period to commercial banks and other credit and financial institutions for conducting currency operations. Banks and other credit and financial institutions which hold a general NBU license have the right to make a wide variety of transactions with foreign currency (exchange, transfer, etc.).
Individual licenses are issued both to residents and non-residents for conducting single currency operations for the period necessary to complete such an operation. Individual licences are required for the following operations:
The Law of Ukraine on Procedure of Settling Foreign Currency Accounts establishes deadlines for payments within export and import operations. Namely, foreign currency proceeds of Ukrainian residents must be transferred from abroad no later than 90 days from the date of export of the goods (works, or services). The date of export is confirmed by customs declaration (for goods) or by a document certifying the performance of works or services executed between the parties. The same rule of ninety days applies for import operations; in particular, imported goods (works, or services) must be brought onto the territory of Ukraine no later that the ninetieth day from the date of advance payment made by Ukrainian resident.
Exceeding of such terms in both export and import operations requires an individual license from the NBU. Failure to comply with the above terms results in a penalty of 0.3% of non-returned foreign currency proceeds or the amount of non-received goods (works, or services) for each day it is late.
In order to make payments by residents to non-residents for: (1) works and services performed or rendered by non-residents, (2) intellectual property rights, (3) payments on promissory notes and in some other cases under the contract which price exceeds EUR 50,000 (or equivalent in other currency) Ukrainian companies are obliged to go through a mandatory state examination of prices. This procedure is intended to check whether the contractual price complies with current market prices.
Starting from September 11, 2005 residents and commercial banks, which attract non-resident loans in foreign currency for a term not exceeding 180 calendar days are obliged to reserve 20% of the total amount of such loans with the NBU. After expiration of the reservation term. the reserved funds shall be returned to the resident. This rule doesn't apply to overnight and overdraft loans received by banks for terms not exceeding one operational day.
The requirement of the NBU regarding mandatory reservation is effective within 6 months from the date it comes into force, i.e., until March 11, 2006.
Prepared in accordance with the materials of DLA Piper Ukraine LLC