Lawyer with Legal Alliance Company Yana Kartseva – a member of EBA currency regulation working group meeting

On June 2, this year a regular EBA currency regulation working group meeting was held. The topic of the meeting was an overview of recent changes in Ukrainian legislation regarding foreign investments in Ukraine.

At the meeting, Legal Alliance Company was represented by a lawyer Yana Kartseva.

The working group analyzed the letter of the National Bank of Ukraine of 17.05.2010 № 13-214/2594-8235, by which in connection with the entry into force as of 15.05.2010 of the amendments into the Law of Ukraine of 23.06.2009 N 1533-VI "On amendments to some laws of Ukraine with a purpose to overcome negative consequences of financial crisis" and the Law of Ukraine of 19.03.96 N 93/96-VR "On regimes of foreign investments" foreseen by the Law of Ukraine dated on 27.04.2010 N 2155-VI "On amendments to some legislative acts of Ukraine concerning stimulation of foreign investments and crediting”, the obligatory state registration of foreign investments is terminated.

So according to changes:

• Registration of foreign investments is optional;
• Registration of foreign investments is performed by the Government of the Autonomous Republic of Crimea, regional, Kyiv and Sevastopol city state administrations (either in property or in monetary form);
• Exercising of investment activities in monetary form is not necessarily done through investment accounts opened with authorized banks in Ukraine.

Therefore, the procedure for foreign investment actually comes back to the old order, being valid until entry into force of the Law of Ukraine dated on 23.06.2009 N 1533-VI " On amendments to some laws of Ukraine with a purpose to overcome negative consequences of financial crisis” at least on the legislative level.

However, the practice remains controversial, because the changes were not included in the Resolution of the National Bank of Ukraine "Regulation of foreign investments into Ukraine" of 10.08.2005, N 280 and the Regulation on the procedure and conditions of foreign exchange trading, approved by the Resolution of the National Bank of Ukraine "On approval of regulations of the National Bank of Ukraine” of 10.08.2005, N 281.

It is worth noting also the letter of the State tax Administration of Ukraine dated on 14.04.2010 N 7394/7/22-5017, which establishes an obligation for obtaining of a certificate, confirming payment of income tax by non-residents in Ukraine in case of returning abroad of foreign investments, as well as incomes, profits and other funds received by the foreign investor from his investment activity in Ukraine.

It is rather interesting that in order to obtain such certificate, a list of documents is not exhaustive, and the tax body has a right to request "other documents allowing determining the legality and completeness of non-resident’s income taxation (discounts or tax exemptions).

In connection with the existing conflicts and gaps in the foreign investment legislation, the working group together with EBA drafted a letter to the chairman of the National Bank of Ukraine, V.S. Stelmah in order to bring into correspondence the current legislation in force and to eliminate gaps and conflicts in legislation.

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