Effective 10 September 2024, the National Bank of Ukraine is introducing amendments to the current FX restrictions. On the one hand, the NBU is relaxing a number of restrictions, and on the other hand, it is taking measures to prevent unproductive capital outflows from Ukraine.
The easing of FX restrictions will support the country's defense capabilities and the operation of Ukrainian enterprises and the Nuclear Insurance Pool.
The amendments will apply to:
- the purchase and transfer of foreign currency to compensate for carbon dioxide emissions.
State-owned companies will be able to purchase and transfer foreign currency in favor of nonresidents to buy emission quotas to cover or compensate for carbon dioxide (СО2) emissions associated with aviation activities. This will facilitate the continuity of defense procurement under state contracts, ensure further air transportation outside Ukraine, and support military and technical cooperation between Ukraine and Europe.
- payment transactions under reinsurance contracts 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 already authorized reinsurance premiums or payments). In particular, the NBU will authorize break-even bonus payments that are a mandatory condition set forth in a reinsurance agreement. This easing will have little impact on international reserves, but it will allow the Nuclear Insurance Pool to fulfill its liabilities to its partners, which is important for the uninterrupted operation of the industry.
- the purchase and transfer of foreign currency by resident legal persons that are e-commerce entities for the purpose of paying VAT in the EU.
The NBU will allow e-commerce entities to purchase and transfer foreign currency abroad to pay VAT under transactions to purchase goods from Ukrainian producers by consumers from EU countries. In order to conduct these transactions, the e-commerce entity must be registered as a taxpayer in the EU.
The easing of restrictions will primarily support small and medium-sized enterprises. They will be able to promote their products in the EU market through trading platforms. At the same time, this measure will not have any adverse impact on international reserves, as the inflow of foreign currency to Ukraine for the goods sold will significantly surpass the additional demand for foreign currency to pay VAT in the EU.
- the reimbursement of coupon payments on Eurobonds.
In addition to the existing opportunities introduced in May and July, the NBU will enable businesses to receive reimbursement for coupon payments on Eurobonds made from 24 February 2022 through 9 July 2024. Such transfers can be made only at the expense of the businesses’ own foreign currency (not purchased or borrowed from a resident) and therefore they will not have a negative impact on international reserves.
Only those companies that have no pending currency supervision over exports of goods during the 12 months preceding the date of the transaction will be able to carry out said transactions. This condition will encourage businesses to promptly return to Ukraine FX earnings from the export of goods.
Tightening FX restrictions will help to prevent unproductive capital outflows from the country.
This, in turn, will help to maintain international reserves at a sufficient level, which is important both for protecting the sustainability of the FX market and for moving faster toward easing FX restrictions.
Tighter restrictions will apply to payments abroad using payment cards issued by Ukrainian banks to FX accounts to pay for goods and services abroad, including:
- watches, jewelry, silverware, precious stones, coins, and more.
The NBU sets a monthly limit of an equivalent of UAH 100,000 for payments to FX accounts abroad using payment cards issued by Ukrainian banks, for transactions under merchant category codes 5094 (precious stones, metals, and jewelry), 5944 (watches, jewelry, and silverware), and 5972 (stamp and coin stores). This limit is in line with the general limit set by the NBU for payments abroad using payment cards issued by Ukrainian banks to accounts in the domestic currency.
The results of NBU's analysis involving banks and payment systems showed the need for introducing this measure. The analysis confirmed that attempts were made to avoid the restriction on the purchase of precious metals outside Ukraine imposed by the NBU for the period of martial law.
- transactions with real estate agents and managers abroad.
A monthly limit of an equivalent of UAH 500,000 was set for payments to FX accounts abroad using payment cards issued by Ukrainian banks, for transactions under the merchant category code 6513 (real estate agents and managers). Transactions under this code are executed to pay management fees, rental fees, and other related commissions.
The limit of UAH 500,000 takes into account the needs of Ukrainians residing or traveling abroad and meets the needs of 98% of bank customers who carry out these transactions. The limit will help prevent attempts to circumvent the NBU's restrictions on such transactions and avoid a significant capital outflow from Ukraine.
The above changes were introduced by NBU Board Resolution No. 108 On Amendments to NBU Board Resolution No. 18 dated 24 February 2022 dated 6 September 2024. The amendments will come into force on 10 September 2024.