Source: 24.ua
In Ukraine, there is a rule of mandatory sale of foreign currency earnings. Technically, the portion of currency earnings subject to mandatory sale has decreased from 75% to 50% over the past two years. However, as for individual entrepreneurs who work under international business contracts and receive salaries for their work in foreign currency from abroad, the mandatory sale of foreign currency earnings has increased up to 100% for them.
Why? It is so, because starting from September 2016, individual entrepreneurs can not withdraw any dollar or euro they earned under international business contracts from their accounts in Ukraine. First of all – because there is no possibility to transfer the IE’s foreign currency, which is not subject to mandatory sale, to your personal currency card and then, withdraw money from this account, for example, in another country. In September 2016, the National Bank of Ukraine issued this “restriction” in the format of clarification, according to which it is impossible to transfer money from the IE’s account to your personal account. That is, in fact, starting from September 2016, there is a rule of mandatory sale of 100% foreign currency earnings for IEs. Although, the NBU officially declares the foreign currency liberalization and reducing the mandatory sale of foreign exchange earnings.
According to IT and Telecom experts from the Better Regulation Delivery Office (BRDO), in the IT industry, this restriction is applied to 20-30 thousand software developers who are IEs and work under international business contracts.
Since the average monthly income of IT specialists is about $1,800, according to the BRDO, that the export of IT specialists who are IEs will range from $360-540 million in 10 months. This completely corresponds with the NBU’s data: the volume of computer services exports for transactions in the amount of less than $20,000 over 10 months of 2017 amounted to $674.5 million, and for transactions in the amount of more than $20,000 – $132.7 million.
IEs lose about 30 kopecks with the mandatory conversion of every dollar (the difference between currency buying and selling rates). So, this restriction costs 3,240 hryvnas per year for an average IT specialist, and for the whole sector – about 65-97 million hryvnas per year.
According to the IT and Telecom Sector Head Oleksandr Kubrakov, the obligation of exporters to sell earned money is a restriction on economic freedoms.
“No developed country has such a rule. Moreover, a number of post-Soviet countries has already cancelled this restriction. In particular, in Uzbekistan and Russia. The neighboring Belarus has lowered the sales rate to 10%,” the expert says.
The representative of the IT industry Dmytro Ovcharenko (CEO of ALCOR) said that it was very important for Ukraine to new innovative levers, by using which it would be possible to have a powerful economic boom during the war. The today’s IT industry is already more than 3 billion dollars of ready foreign currency annually and 3% of GDP.
“But how to keep skilled programmers from moving to developed countries and attract them to Ukraine from the CIS? Belarus, for example, has adopted unprecedented laws on IT development that allowed even the use of individual English law institutes! Therefore, the possibility to accept honestly earned currency proceeds on own foreign currency account from abroad will be a great help for IT guys-entrepreneurs in the context of unstable hryvna and will increase the attractiveness of Ukraine as an IT platform,” Dmytro Ovcharenko emphasized.
Viktor Halchynsky, Head of the press service of PJSC “Kredobank” said in a conversation with website “24” that the restriction to transfer the foreign currency from accounts of individual entrepreneurs to personal accounts, to put it mildly, was not very logical – because such incomes were taxed in accordance with the Ukrainian legislation and the taxation system, under which such entrepreneurs worked. In addition, according to this approach, a similar restriction should apply to transactions in hryvnas. “In such a way, today entrepreneurs are forced not only to lose due to exchange rates, but also meet additional expenses for the opportunity to use earned and already taxed funds,” the bank’s representative noted.
“Consequently, such a restriction does not encourage entrepreneurs to deal with the Ukrainian banking sector and stimulates to keep foreign exchange assets and settle payments in foreign banks due to the liberalization of the National Bank’s attitude towards accounts abroad. In our opinion, the cancellation of this restriction will allow to increase exchange inflows into the banking system, and a portion of these currency earnings will be spent in Ukraine anyway,” Viktor Halchynsky said.
How to solve the problem?
Oleksandr Kubrakov emphasized that Ukrainian lawmakers understand the unfriendliness of such a rule for the market and, according to it, this restriction may be set for a period of up to 6 months (Art.25 of the Law on the NBU). “But there is nothing more permanent than something temporary. Especially when it comes to bans,” he said and added that the mandatory sale of proceeds by exporters is not only a ban to dispose foreign currency, but also a barrier for economic development.
The BRDO Office believes that it is quite simple to allow IEs to continue disposing their unsold foreign currency, and the NBU just will need to:
1. Cancel own amendment to the NBU’s Instruction and allow transferring the foreign currency from IE’s accounts to personal accounts;
2. Publish a clarification letter on the possibility of transferring the foreign currency from IE’s accounts to personal accounts.
The BRDO hopes the NBU will include this decision in its nearest plans and implement it.