Read original article at 112.ua
Last week, the parliament passed a law on the liberalization of monetary policy. There are many progressive norms for business as well as for the population in this document: now they can safely buy shares of foreign companies, open accounts in banks of other countries. But as usual, there are disadvantages, and the instruments of influence on the currency market from the National Bank side remain there.
On June 21, the Parliament adopted the law "On Currency" (bill No. 8152) in the second reading. The decision was made with a minimum margin over the necessary - for the law voted 228 people's deputies. The bill was actually adopted in a moment, as it was introduced by the president as urgent on March 19, and on May 17 it was passed in the first reading.
The document developed by the National Bank is designed to facilitate the liberalization of the foreign exchange market, namely, to simplify the process of currency settlements and introduce the principle "everything that is not forbidden is allowed”.
"The new currency law has already been called a" visa-free regime "for capital, which provides for the freedom to carry out foreign exchange operations. Liberalization of the foreign exchange market is a necessary part of the fulfillment of Ukraine's obligations under the Association Agreement, in particular the implementation of the principles of regulating the movement of EU capital (under the Council Directive of 24.06.06 .1988 No. 88/361 / EEC) ", emphasizes Roman Kobets, lawyer of the "Poberezhnyuk and Partners" Legal Group.
The law will enter into force on the day after its publication. But it will not be put into effect until seven months later. Six months the finalization of the normative legal acts of the National Bank will be continued, after which the National Bank will publish them for a public acquaintance. The NBU promises that the law will be enacted 30 days after the promulgation of relevant regulations. That is, the actual "commissioning" of this law will begin around January-February 2019.
It should be noted that this law in many respects has already ripened - the currency market was regulated by the decree of the Cabinet "On Currency Regulation and Currency Control" (adopted in 1993) and more than a hundred normative acts of the National Bank. As a partner of the Taxation and Business Efficiency Practice of Juscutum JSC Natalia Radchenko notes, for comparison, in the USA the control over the export of capital was abolished in 1974. And at the end of the 20th century, almost all the EU countries went through the path of monetary liberalization.
"The new law, although not perfect, is a law that corresponds to the XXI century, in contrast to the post-Soviet decree of 1993. This law should have been adopted as far back as the late 90s and early 2000s. And in this case today we could hope for a more progressive law, but this law is a huge leap forward for Ukraine in terms of currency regulation, "says Gleb Segida, managing partner of the law firm Pravovest.
However, not all experts agree that the law "On Currency" improves something radically, despite the apparent liberalization, the NBU still keeps the currency market under control. "In fact, this law regulates and consolidates the existing system of regulation of the currency market by the National Bank. There is nothing radical or new in this law," believes Okhrimenko, the president of the Ukrainian Analytical Center.
Less number of licenses and currency control
As noted by the experts interviewed, there are a lot of positive aspects laid down in the law. The decrease in regulatory control is already a good signal for business. Especially in Ukraine, where permits must be obtained for everything, and the bureaucracy achieves at times unthinkable scales. All financial transactions will become easier and faster, obsolete forms of regulation will disappear. The new law provides in Ukraine a basis for the free movement of capital and currency liberalization, bringing the country closer to European standards.
"The positive thing is that the document has been adopted. What should have been done a long time ago is to collect in one document rules on the regulation of foreign exchange transactions. This will reduce the "confusion" in regulation. When the new rules come into force, the actions of the participants the currency market and the regulator should become more transparent. But this is in theory, how "protective measures" can actually be applied, on what specific grounds and for how long, is not written out in detail, as well as regarding the requirements for supporting documents for the owner "said Viktor Shulyk, director of the market research department at the IBI-Rating rating agency.
The law introduces a new regime of currency regulation on the principle that "everything that is not directly prohibited by law is permitted". "Under the new rules, it will be much easier for Ukrainians to invest abroad, to freely dispose of the currency inside the country and for export-import transactions. The principle "everything not prohibited is allowed", instead of the current one, "everything that is not allowed is prohibited" is introduced. That is, we turn to market relations from neo-communist norms, characteristic for the 90's, "Gleb Szegida emphasizes.
Among the main steps to liberalize the foreign exchange market are the following:
The cancellation of individual licenses for foreign exchange operations, which will lead to the possibility of free transparent investment abroad without special licensing procedures, for example, for the purchase of real estate, corporate rights, securities. There are only two types of licenses for currency transactions left: bank one (including currency) for banks and currency one for non-bank institutions (exchange offices). The abolition of mandatory registration of loans attracted from non-residents, which should be an incentive for foreign investors to lend to the Ukrainian business (the National Bank will need to be notified of the raising of funds only after the fact). The abolition of the 180-day limit on the calculation of foreign economic transactions and the resulting sanctions in the amount of 100% of the transaction amount, which should significantly simplify the conduct of business on the basis of foreign economic contracts. The introduction of the ability to place foreign currency on foreign currency accounts of foreign banks and freely transfer it to accounts in national banks will facilitate the official importation of foreign currency by persons who receive income abroad. Removal of currency control for transactions that do not exceed 150 thousand UAH.
"Previously, for all this, it was necessary to collect a large package of documents and approve them in the NBU, which could take a very long time, but now there will be no such control. Non-banking institutions will additionally have to obtain an authorization document (currency license), but one license is not six, as it was before, "explains Artem Kovbel, partner of the audit and consulting company Kreston GCG.
An important point is the abolition of restrictions on 180 days of settlements on export-import transactions, which is why the earlier controlling authorities could block the work of companies that violated this rule. At the same time, the National Bank will still have the right to demand from legal entities all documents related to a foreign economic activity.
All of the above (except for settlements under contracts) applies to the population, which will also be able to buy and sell currency and transfer currency for up to 150 thousand UAH. And in the future, currency control will be canceled on transactions up to 300 thousand UAH.
Such innovations will simplify the lives of numerous labor migrants, as they have a legitimate opportunity to officially keep money in foreign banks, transfer them from a bank card to Ukraine and back. Part of the finances of labor migrants, which is more than $ 9 billion a year, will now often stay abroad.
As noted by Arthur Zagorodnikov, deputy chairman of the board of FUIB Bank, as a consequence of the law, banks will be able to attract new customers, expand products to meet customer demand, and increase the volume of foreign exchange transactions. Also, banks will have the opportunity to provide analytical, consulting, as well as services for conducting transactions for the acquisition/sale of securities of foreign issuers. Business, realizing the absence of legislative restrictions, will be able to work more confidently and plan its activity on the domestic market for a long time.
In addition, the law should increase the investment attractiveness of the country, and the National Bank hopes for the influx of foreign investment. "The presence of regulatory restrictions, including in the foreign exchange market, is one of the reasons for the slow inflow of foreign investments into the country. Now that they are promised to be removed, it will be easier for investors to work in Ukraine and develop their projects here, but this is in theory. In practice, everything can turn out differently because of some shortcomings of the law "On Currency", emphasizes Artem Kovbel.
Withdrawal of capital and even more "free" exchange rate of hryvnia
Despite the liberalization, the National Bank reserved the right to set time limits in manual mode in case of crisis situations up to 6 months (and with the possibility of their extension). In the presence of signs of crisis, the National Bank will be able to introduce protective measures: the obligatory sale of part of the currency, the establishment of terms for settlements under export-import contracts, the introduction of special permits for foreign exchange operations and reservation for currency transactions. That is, the functions of "manual control" with huge powers of the National Bank still remain.
"Currency liberalization is not unlimited, the National Bank was left with the power to impose restrictions on almost all indulgences in the event of risks in the foreign exchange market. Based on the fact that the lack of stability in the foreign exchange market has become a familiar phenomenon for us, will the currency market actually become the most liberal, time will tell," says Roman Kobets.
Due to the fact that the regulatory and legal framework necessary for its implementation will be worked out for 7 months, it is not yet possible to say unambiguously what it will be. "I would wait for the texts of subordinate regulations of the National Bank of Ukraine before rejoicing at the abolition of currency restrictions in the export-import operations," emphasizes Natalia Radchenko.
Despite its relevance, the adoption of the law "On Currency" also carries risks. It weakens the currency control, but at the same time the tax pressure and the shadowing of business, provoked by it, have not gone anywhere. If you do not create an attractive investment climate in the country, then the implementation of the norms of the law will directly lead to an outflow of Ukrainian capital abroad.
"Thus, the law will only help dishonest companies to withdraw funds to offshore companies, and not only". Other market players, as well as investors, using innovations, will probably want to buy more shares of foreign companies or open accounts abroad, which will provoke a massive outflow of capital from Ukraine To prevent this from happening, along with innovations in the currency sphere, it is necessary to take other measures that encourage holders of capital to leave it in Ukraine, and not to withdraw," Artem Kovbel emphasizes.
According to Victor Shuyk, some norms in the law are written out weakly or blurry, which can seriously complicate in practice the implementation of the principle "everything that is not directly prohibited is permitted." For example, the possibility (albeit with accountability) to introduce restrictive measures, requirements for supporting documents.
In addition, the abolition of currency control for transactions for the purchase and transfer of currency for up to 150 thousand UAH in equivalent is not entirely effective. "This threshold for business, especially the large one, is too small, it has to work with larger amounts of money. It turns out that in this case, the business will not feel much profit, " Artem Kovbel explains.
There is one more point. In accordance with the new law, the rights of banks will expand. They, for example, will be able to demand documents from companies and individuals on the transactions carried out and then return to the NBU for verification. That is, banks of a kind will serve as agents of the NBU and monitor financial transactions instead of it.
The realities of the Ukrainian currency regulation are such that control over the people's finances can become tougher at the stage when you come to the bank and want, for example, to buy currency for buying real estate. Financial monitoring has not been canceled yet. And the bank is obliged to check you and the origin of your money.
"First, the law states that both residents and non-residents are required to provide information on their currency transactions to banks. Secondly, banks have now begun actively monitoring the origin of the funds that come to them. Until you show that your income has a legal source of origin and do not declare it, under the new law, the bank will refuse to service such unidentified money, "said Natalia Radchenko.
Nothing strange happens, just now businessmen and wealthy people who want to take advantage of the opportunities of currency liberalization should think about the need for a normal tax history and the history of the origin of their incomes.
"The law stipulates that banks can conduct inspections of those currency transactions that cause them suspicion and request additional information that the parties will be required to disclose. Ukrainian lawmakers did not invent a bicycle, this practice exists and operates in most developed banking systems," emphasizes Natalia Radchenko.
The reverse side of the liberalization of the foreign exchange market is that the hryvnia exchange rate will become even more "free", as foreign investors can react to negative events by the withdrawal of capital. The investment climate in the country and the tonality of the news line will become even more significant factors for the national currency rate.