Changes to the procedure and penalties for violating foreign exchange legislation

Ukraine

On 26 May 2021, the Cabinet of Ministers of Ukraine adopted the Resolution adopted a Resolution setting out the procedure the tax authority should use to fine legal entities for violating currency legislation.

The Resolution defines the penalties for Ukrainian legal entities (not including banks and non-banking financial institutions) that violate currency control requirements, and introduces the mechanism through which the State Tax Service of Ukraine should apply them.

According to the Resolution, tax authorities can impose penalties for each type of violation of currency control legislation, including regulations on settlements in Ukrainian and foreign currency, foreign exchange transactions, currency trading and cross-border currency transfers. The Resolution, however, does not cover violations of payment deadlines for export and import operations.

Under the Resolution, the applicable penalties include:

  • 25% of the amount of the transaction conducted in violation of currency legislation for each violation; and
  • 50% of the amount of the transaction conducted in violation of currency legislation for each repeated violation over the course of one year.

The tax authorities will apply penalties within six months of the detection date, but not later than three years of the transaction date.

The Resolution came into force on 29 May 2021.

CMS will continue to monitor the currency legislation requirements and keep you updated on any developments.

For more information on this Resolution, contact your CMS advisor or local CMS experts: Anna Pogrebna or Ihor Olekhov.

LegislationResolution of the Cabinet of Ministers of Ukraine No. 524 dated 26 May 2021 “On the approval of the procedure for the tax authorities to apply measures of influence in the form of penalties on legal entities (except for authorised institutions) for violating currency legislation by the tax authorities” (in Ukrainian).