Conclusion on the extension of the terms of settlements on foreign exchange transactions
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We are often addressed with the Clients intending to order expensive equipment with delivery to Ukraine. Depending on the complexity and specificity of the equipment you may need to order not ready-made equipment, but the manufacture of such equipment. That is to make it “on request”.
If the turnaround time for such an order exceeds three months, and you pay the cost of the order immediately, problems may arise. Before the war, the National Bank set a deadline for importing such orders of 365 days, but now it is 3 months. That is, the Client has 3 months from the date of payment in currency to bring the goods to Ukraine or to return the money to Ukraine.
In another case, the bank sends a notice to the tax office, the tax office, in turn, conducts a desk audit and issues a tax notice-decision about the imposition of penalties in the amount of 0.3% per day. And the amount will increase until the equipment is brought in or until it is equal to the amount of payment made. Then the accrual stops.
This situation can be avoided by obtaining a Conclusion on the extension of the terms of settlement of currency transactions.
Is it possible to stop the FX settlement deadline if the countdown has been already launched?
Theoretically yes, but in practice it is actually impossible. Especially if the payment was made after the start of the war in Ukraine.
We faced the situation of Clients who were deceived abroad: crooks forged the counterparty’s mail, said that the counterparty changed bank details, signed an additional agreement, and the Client transferred funds to the new account. But in fact, the counterparty didn’t change any bank details, and the Client didn’t check the information and paid the money, because it had large turnovers and the change of bank details was a normal situation.
There were opened criminal proceedings in Ukraine and abroad. Citizens of other country tried to withdraw money, and they managed to freeze a part of the funds. However, they were blocked for the period of criminal proceedings (more than a year) - criminal proceedings were opened abroad on the fact of money laundering. The victim under this article is a territorial community, and the money had to be collected at the end of the proceedings in favor of the territorial community of another country.
At this time in Ukraine the time limit for the return of monetary values began. The Chamber of Commerce and Industry did not consider someone else’s unlawful acts as force majeure and therefore did not issue an appropriate opinion to extend the deadline for settlement. In such a situation, it is no longer possible to suspend the settlement terms, the Client’s case has been sent to court, where it is at this moment.
This example shows that it is necessary to take care of the term extension at the stage of ordering the goods. Adequate assessment of the situation and acting in advance is your chance to get the goods within the desired period without any problems. Avoid pushing the situation to inspections, penalties, and unpromising lawsuits.
How do I get a Conclusion on an extension of the settlement period?
This conclusion is issued by the Ministry of Economy of Ukraine within 10 business days. At present (for the period of war) this service is provided only online; paper documents are not considered due to the remote work of the Ministry’s employees.
When should I apply for the Conclusion?
It’s all very individual. If you see at the stage of making an order that it will be more than 3 months - no point dragging it out and you can submit documents immediately. In the case, however, when you planned to receive the goods within 3 months, but for some reason it is not possible, then you should apply for the Conclusion as soon as you become aware of such circumstances.
Obtaining the said Conclusion on the extension of the settlement period will allow you to avoid unpleasant situations and expenses.
In order to obtain a Conclusion, you must file the following documents:
- an application in the prescribed form;
- a foreign economic contract;
- a document confirming the implementation of foreign economic activity (payment document);
- other documents at the discretion of the applicant (documents confirming the impossibility of delivery of goods within the period specified by the National Bank), such as additional agreements to indicate the term of contract performance, technical specifications or drawings.
Please note that additional documents are to be submitted at the discretion of the applicant. They can both play into your hands, and have the opposite effect, if errors in their execution appear during the verification process.
You may be denied a Conclusion for a number of reasons, including, but not limited to:
- provision of unreliable information;
- errors in the execution of documents or their incompleteness;
- lack of authority to sign the Application of the person who signed such an Application;
- absence of essential conditions of the contract in the foreign economic contract, directly provided by the legislation;
- presence of force majeure circumstances that caused prolongation of settlement terms, etc.
It is also worth adding that there is a list of goods for which it is not possible to extend the terms of settlement, among them: meat, rye/cereals, some food products, electricity and oil/oil products, ammonia, raw hides of cattle.
Our company offers you the services of specialists who will:
- analyze your situation at the stage of ordering goods and provide recommendations on the need to obtain the Conclusion;
- prepare and submit all documents to the Ministry of Economy in a timely manner to obtain the Conclusion;
- help you to comprehensively address the issue of importing goods or equipment into Ukraine.
Don’t risk your money and goods – contact us. We will approach the issue comprehensively, find the option that will minimize the risks and get your goods safely.