Ukrainian Economy in Brief – Newsletter, 20 June, 2023

Several MPs are trying to delay by using amendments to the second reading of Draft Law (DL) #8401 on returning pre-war settings of tax policy. There were 1,900 amendments submitted to the DL by the end of the deadline. Within no more than 12 plenary days the Parliament needs to consider all amendments in the full procedure.

To expedite legislative approval, Tax Committee lawyers are looking for a solution to reduce the number of “spam amendments” and time spent on their consideration. So, there are reasons to expect that the DL will be adopted in July 2023.

The DL on the corporate governance reform at the Gas Transmission System Operator (GTSO) is fully agreed upon with the Energy Community Secretariat. Maksym Khlapuk (member of the Ukrainian Chapter of the Parliamentary Network of the World Bank and IMF) and Yaroslav Zheleznyak (Co-Chair of the Ukrainian Chapter of the Parliamentary Network of the World Bank and IMF) will submit the text, designed in coordination with the Energy Community Secretariat, this Monday, June 19. 

NBU step by step eases FX restrictions. Starting June 16, the regulator allows resident borrowers to transfer funds abroad to Repay Some Categories of External Loans.

According to the statement on the NBU official website, it applies to foreign loans that: a) were secured by a guarantee or surety of an international financial institution; b) granted with the participation of a foreign export credit agency or a foreign state through an institution authorized by it or through a foreign legal entity whose shareholders include a foreign state or a foreign state bank.

Other Topics of Interest

Ukraine’s GDP Growth is Downgraded, But It’s Doing ‘Marvelously,’ IMF Rep States

The IMF praised Ukraine’s government for steering the economic policy during wartime, even though the fund downgraded its growth outlook due to Russia’s strikes on energy infrastructure.

Other key economic decisions

The law on nationalizing banks of sanctioned owners came into force. Last week President Zelensky signed  DL #9107-1, enacting new law that allows the National Bank of Ukraine (NBU) to start the procedure of nationalization of the Sense Bank (formerly Alfa Bank) which has Russian shareholders who are under sanctions.

A new DL for the regulation of virtual assets in Ukraine was announced. The National Securities and Stock Market Commission with the help of EU experts designed the concept of the DL which will impose regulations on markets in crypto assets (MiCA) adopted by the EU earlier this year.

The DL suggests implementing MiCA regulations into Ukrainian legislation. It also suggests tax rules for operations with crypto assets without any tax incentives for legal entities and proposes a reduced income tax rate for individuals during the transition period if individuals held crypto assets more than a year before selling.

The concept of the DL will be discussed with the NBU and the Parliamentary Tax Committee before submission to the Verkhovna Rada.