With effect from 19 August 2016, the National Bank of Ukraine (the “NBU”) abolished the requirement for Ukrainian residents to obtain a price evaluation act – an approval from State Enterprise “State Research and Information Centre for Monitoring International Commodity Markets” (Derzhzovnishinform) – to make cross-border payments for the purchase of services and IP rights from foreign residents in the amount exceeding EUR 50,000.
The reasoning behind price evaluation acts was that they were supposed to prevent non-productive outflows of capital from Ukraine in the form of payments for intangible assets, such as services and IP rights. Where payments exceeded the regulatory threshold (most recently, EUR 50,000), a Ukrainian payer was required to apply to Derzhzovnishinform for confirmation (price evaluation act) that the price of the services or IP rights purchased under the contract was consistent with their fair market value. In the absence of a price evaluation act, Ukrainian banks were prohibited from arranging the payment (subject to several exceptions).
Issuance of a price evaluation act usually took around seven business days, but could be delayed if Derzhzovnishinform requested clarification of any matter. Apart from being an additional administrative procedure, obtaining a price evaluation act sometimes caused inconveniences or payment delays for the contracting parties. Furthermore, Derzhzovnishinform, a state-owned enterprise, was the only entity authorised to issue price evaluation acts, which drew criticism from the Ukrainian antitrust authorities that Derzhzovnishinform held a “dominant position” in the market.
Abolishment of the price evaluation act requirement is definitely a positive step in terms of simplifying cross-border activities of the Ukrainian business. At the same time, the NBU still maintains control over similar outbound transfers. In particular, the NBU is currently empowered to review the underlying documentation and suspend outbound transfers exceeding USD 50,000.
The NBU also continues its policy of strengthening financial monitoring procedures and increasing the level of control by Ukrainian banks over capital outflows. In particular, the NBU has instructed Ukrainian banks to carry out detailed analysis of transactions and obtain additional documentation from clients, where the bank has concerns that the contractual price of goods, services or assets may be inconsistent with their fair market value.