What should we expect from the Law on global currency freedom and capital movement?

These days in Kyiv, the XVII Forum of Financial Directors of Ukraine is taking place, which gathered representatives of business and financial institutions to discuss the exchange of experience and the search for new ways of business development.

On October 18, Valentyn Gvozdiy, Managing Partner of GOLAW firm and Deputy Chairman of the National Bank of Ukraine Oleg Churiy delivered an “Interview on the Stage” in the format unusual for the audience. The main topic of the discussion was the recently adopted Law on Currency and its implications. According to Mr. Churiy, the new bill was fully developed on the basis of business recommendations, which he expressed at the stage of its preparation: “The very philosophy of currency liberalization lies in the fact that we are liberalizing while preserving financial stability.”

In addition, the speaker noted that over the course of several years in Ukraine, many financial restrictions have been lifted, and the results of such actions have been continuously monitored through inflation and exchange rate indicators. As an example, over the last 9 months of this year, the trade volume on the currency market has increased by 40%, which indicates the overall positive effect of the implemented changes.

Mr. Churiy has also commented on the application of the BEPS law package. According to him, the basic principle of currency liberalization is the provision of free movement of capital, and the main condition is that business activity is transparent, and that income tax is paid. “We are actively involved in the development of BEPS packages. Our goal is to achieve equal tax treatment. If free movement of capital is allowed, but at the same time the business will have some tax breaks in other jurisdictions, we will have a situation where the profit will simply flow out, because it is more beneficial this way,” noted the speaker.

Churiy also announced that the laws that have been drafted recently with the Ministry of Finance will be posted on October 22 at the sites of the Ministry of Finance and the National Bank. Among them are draft laws that prohibit the use of international jurisdictions to reduce the tax base, as well as bills on tax information exchange between tax authorities in more than 100 countries of the world. The speaker noted that without the adoption of this package of laws, Ukraine will find itself on the black list of “non-cooperative for tax issues”, and the domestic business will have negative consequences. “We very much hope that these laws will be introduced to parliament as soon as this year,” he said.

Dr. Valentyn Gvozdiy

Dr. Valentyn Gvozdiy

Managing Partner, Attorney at law, PhD

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