Extension of foreign currency settlement deadlines: how businesses can avoid fines

Ukrainian companies operating in international markets regularly face the problem of statutory deadlines for settlements under foreign trade contracts.
Foreign currency control in Ukraine sets strict rules for the deadlines for receiving export proceeds or delivering goods. If these deadlines are breached, a business automatically risks a fine of 0.3% of the contract value for each day of delay.
That is why it is critically important for exporters and importers to use the mechanism for extending foreign currency settlement deadlines through the Ministry of Economy of Ukraine.

What are foreign currency settlement deadlines?
Under the Law of Ukraine “On Currency and Currency Operations”, export and import transactions are subject to maximum settlement periods.
This means that:

• an exporter must receive foreign currency proceeds for the goods sold within the prescribed period;
• an importer, after making payment, must receive the goods within the agreed period.
  These transactions are monitored by banks within the framework of foreign currency supervision.
  If the deadlines are violated, the bank informs the tax authorities.

What is the penalty for breaching foreign trade deadlines?
One of the most critical sanctions for businesses is a 0.3% daily penalty.
It is important to note that:

• the penalty accrues on a daily basis;
• the total amount may reach 100% of the contract value.
  For example, if a contract is worth USD 500,000, the penalty may reach USD 500,000.
  For a business, this creates enormous financial risks.

Why do breaches of currency control deadlines occur?
In most cases, violations of deadlines do not result from bad faith on the part of the company.
The main reasons include:

• delays in production of goods;
• problems with international logistics;
• customs procedures;
• force majeure events;
• banking compliance checks;
• sanctions restrictions;
• changes to contract terms;
• war‑related risks.

In practice, this means that real international trade processes often do not fit into the deadlines set by the regulator.

How to extend foreign currency settlement deadlines
Ukrainian legislation provides a protective mechanism – obtaining an opinion from the Ministry of Economy on the extension of statutory settlement deadlines.
This document allows a company to:
✔ officially extend the performance period of a foreign trade contract;
✔ avoid the 0.3% daily penalty;
✔ confirm the lawfulness of the transaction to the bank;
✔ protect the company during tax audits.
Without such an opinion, the bank may close the transaction as one that breaches currency regulations.

What documents are needed to extend the deadlines?
To obtain the Ministry of Economy’s opinion, a company must prepare a package of documents, including:

• an application for extension of deadlines;
• a copy of the foreign trade contract;
• invoices;
• documents confirming the reasons for the delay;
• an explanation of contract performance;
• confirmations from counterparties.
  The most challenging part is to properly substantiate the reasons for extending the deadlines.

Key risks for business
In practice, companies face the following issues:

• incorrect preparation of documents;
• insufficient justification of the reasons for delay;
• refusal to issue the Ministry’s opinion;
• missing the deadline for submitting documents;
• conflicts with banks.
  As a result, businesses face fines, blocked transactions or tax claims.

Legal support for currency control
For companies engaged in foreign trade, legal support of currency operations makes it possible to:

• assess currency control risks;
• prepare the necessary document package;
• obtain an opinion on extension of settlement deadlines;
• maintain effective communication with banks;
• protect the company during tax inspections.

This is especially relevant for businesses operating in:

• agricultural exports;
• mechanical engineering;
• IT services;
• international trade;
• import of equipment.

Conclusion
Currency control in Ukraine remains one of the most complex aspects of foreign economic activity.
Breaching settlement deadlines can lead to significant fines for businesses.
At the same time, the law allows deadlines to be extended through the Ministry of Economy, which helps avoid sanctions and protect the company.
Therefore, exporters and importers should proactively assess currency risks and ensure legal support for their foreign trade operations.

Legal support for businesses
WINNER Law Firm provides comprehensive support for foreign economic activity, including:

• extension of foreign currency settlement deadlines;
• legal support for foreign trade contracts;
• currency control and compliance;
• defence during tax audits;
• tax and customs structuring of international trade.

Author: Ihor Yasko, Managing Partner at Winner Law Firm, PhD in Law.