Oleksiy Paliy
attorney, managing partner
Primary Advisors LLC

Given the frequent changes in currency regulation for business, as well as certain practical nuances in export and import operations, I offer a brief overview of the latest trends.

1. Liberalisation of currency restrictions on imports of commodity products and extension of the deadlines for settlements under export-import transactions

The entry into force on 1 July 2022 of the Law of Ukraine “On Amendments to the Tax Code of Ukraine and Other Legislative Acts of Ukraine on the Revision of Certain Tax Benefits”, which restores duties and taxes on imports of goods and services, was an important event in simplifying currency restrictions on imports of goods.

Cancellation of the concept of critical imports

The NBU has recently approved regulations in line with the changes introduced by the Cabinet of Ministers of Ukraine’s Resolution No. 761 dated 7 July 2022, which effectively abolished the concept of critical imports.

What will it do?

This means that from 9 July 2022, businesses will be able to buy foreign currency and transfer funds for imports of goods, which means that they can import any commodity product. However, restrictions on the purchase of foreign currency and cross-border transfers for the import of services will remain in place. Companies will only be able to import those services, works, intellectual property rights and other non-property rights included in the list approved by the Cabinet of Ministers of Ukraine on 07.07.2022 No. 761.

Deadlines for settlements on export and import transactions have been extended

In order to prevent the outflow of capital abroad, starting from 4 April 2022, the National Bank of Ukraine reduced the deadlines for settlements for export and import transactions carried out from 5 April 2022 from 365 to 90 calendar days, and from 8 June 2022, the relevant deadlines were extended by calendar days. However, as of today, to support Ukrainian businesses, starting from 9 July, the NBU is extending the settlement period for export and import transactions from 120 to 180 days. This decision will significantly expand the ability of Ukrainian entrepreneurs to avoid logistical problems when exporting and importing products during the war.

2. By amending Resolution No. 18, the NBU Board simplified currency restrictions for diplomatic missions and consular offices of foreign countries in Ukraine, as well as state bodies authorised under Ukrainian law to carry out operational search, counterintelligence, intelligence activities or pre-trial investigations.

3. Reducing pressure on residents’ foreign exchange settlements from 11 July 2022
A resident client is obliged to use the foreign currency purchased from 11 July 2022 in accordance with the established procedure through a bank no later than two business days after the date of its crediting to its current account for the needs specified in the application for the purchase of foreign currency.

This restriction does not apply, in particular, to the purchase of foreign currency:

  • for residents to carry out mobilisation and other activities determined by the laws of Ukraine regulating relations in the areas of national security and defence;
  • state bodies authorised by the legislation of Ukraine to carry out operational search, counterintelligence, intelligence activities or pre-trial investigation;The State Treasury Service of Ukraine;
  • on the basis of individual decisions of the NBU adopted at the request of the Cabinet of Ministers of Ukraine, ministries, the National Security and Defence Council, and the Security Service of Ukraine.

Resolution of the NBU Board No. 18 dated 24.02.2022, as amended, introduced a moratorium on cross-border foreign currency payments (except for imports) of goods and certain services according to the list, transactions of enterprises and institutions ensuring the implementation of mobilisation plans (tasks) and the Government, certain NBU permits, payments of individuals abroad within the amount of UAH 100,000.00 per month and other exceptions). The Resolution also suspended the servicing banks from carrying out expenditure transactions on accounts of residents whose ultimate beneficial owners are the state that has carried out armed aggression against Ukraine. These restrictions have not been amended to date.

4. Other currency restrictions

CMU Resolution No. 426 dated 09.04.2022 introduced a full embargo on imports of goods from Russia. The ban on Russian imports will block foreign exchange earnings to the Russian Federation by USD 6 billion annually. However, the letter of the Ministry of Economy of Ukraine dated 27.04.2022 No. 4431-07/18273-03 stated that there have been requests from foreign economic operators to grant permission for customs clearance of goods imported to Ukraine before 24.02.2022, the date of the introduction of martial law in Ukraine. In view of such requests, the generally accepted principle of law that laws and other regulations do not have retroactive effect should be taken into account, which, in particular, guarantees the economic stability of business activities.

As the import of goods from Russia is embargoed, some customs posts conduct detailed inspections of goods exported from Russia, even if they were imported before the embargo. Accordingly, there are isolated delays of such goods at customs. When exporting such goods, we recommend that customs clearance be carried out on the basis of prior consultations with the customs authorities.

The Resolution of the Cabinet of Ministers of Ukraine “On Ensuring the Protection of National Interests in Future Claims of the State of Ukraine in Connection with the Military Aggression of the Russian Federation” dated 03.03.2022 No. 187 stipulates that in order to ensure the protection of national interests in future claims of the state of Ukraine in connection with the Russian military aggression, a moratorium (ban) on the fulfilment, including through enforcement, of monetary and other obligations, the creditors (claimants) of which are the Russian Federation or the persons specified therein, is established until the Law of Ukraine on the settlement of relations involving persons associated with the aggressor state is adopted and enters into force. Pursuant to the

Resolution, transactions (including powers of attorney) entered into in violation of the moratorium set out in clause 1 thereof are null and void. These restrictions have not been amended to date.

The Criminal Code of Ukraine provides for criminal liability for publicly denying the aggression of the Russian Federation and the occupation of part of the territory of Ukraine, supporting decisions and actions of the Russian Federation’s authorities regarding aggression and occupation, propaganda in educational institutions, holding positions in the occupied territories, transferring material resources to support aggression and occupation, participating in referendums, other mass, political or informational actions in support of aggression and occupation, conducting economic activities in cooperation with the aggressor state, illegal authorities, Art.

For the commission of these criminal offences by an official of an enterprise, criminal liability of a legal entity in the form of liquidation and confiscation of property may be imposed.

These restrictions should also be taken into account when conducting trading and currency transactions.

© LIGA Information and Analytical Centre LLC, 2022

© LIGA LAW, 2022