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15 October 2019

Foreign economic activity of an entrepreneur. Part 2

When working with foreign customers, as a rule, an entrepreneur receives payment for goods shipped (services provided) in foreign currency. But, as it turned out, settlements in hryvnia or even bank metals are possible. About regulation of payment processes - read in the material.

Determination of income for compulsory sale of currency

Even if the income (revenue) was received in foreign currency, their accounting is kept in hryvnia, therefore, foreign currency revenue must be converted into hryvnia. In doing so, the following should be considered. For several years now, the current legislation provided that part of the foreign exchange earnings was subject to mandatory sale on the Interbank Currency Exchange (hereinafter referred to as the “IMB”). Initially, the currency was credited to a separate analytical account of the balance sheet account 2603 “Distribution accounts of business entities”. Only part of the currency was credited to the entrepreneur’s currency account, and the other was sold at the IMB, and the hryvnia from the sale was transferred to the FLP hryvnia account. The amount of compulsory sale was established by the NBU. From March 1, 2019, it was 30%. Currency was sold on the next banking day at the exchange rate set by the IMB on the day of sale. The exchange rate at the WSE differs from the rate set by the NBU (usually a little higher). Nevertheless, the amount that was credited to the hryvnia account is included in the income. The remaining 70% of the foreign currency proceeds were transferred to the currency account of the FLP. At the same time, the amount of the currency and the NBU rate set on the day of crediting were indicated in the bank statement.

Please note that the distribution account does not have any relation to the FLP, therefore, the date of income generation is determined by the date the funds were credited directly to the entrepreneur's accounts.

In determining income, the following should be considered. For unified persons, the norms of the TCU determine that income received in foreign currency is converted into hryvnias at the official rate of the hryvnia to foreign currency established by the NBU at the date of receipt of such income (paragraph 292.5 of article 292 of the TCU). For system-wide specialists in the NKU nothing was said about this, but the same requirement applies as for singers.

As mentioned earlier, revenue is credited separately to the foreign currency and hryvnia accounts on different dates, therefore, it was reflected in the FLP accounting in two lines. Foreign currency revenue - by the date of crediting to the foreign currency account with the amount in the currency indicated, and through a fraction of its equivalent in hryvnias at the NBU rate established on that date. (This is recommended by tax officials, despite the fact that the book ordering procedure does not require this.) The amount of hryvnia received in the hryvnia account after the sale at the International Bank is recorded by the date it was received (usually the next day). If both operations were carried out on the same day, then the income can be written in one line by adding both amounts.

Mandatory sale canceled

Starting from June 20, the procedure for determining the income received in foreign currency was simplified, since on June 18, 2019, the NBU by the decision of the Board No. 78 canceled the requirement for the obligatory sale of foreign currency earnings. This rule has been applied since June 20. From this date, foreign currency earnings are fully credited to the currency account of the FLP. The NBU’s clarifications should also be taken into account, which states that since the received foreign exchange earnings are sold on the World Bank the day after they are credited to the distribution account, the currency received on June 19 is already fully credited to the entrepreneur’s foreign currency account.

Accounting reflection

Unlike legal entities, for FLP the main accounting register is the Book of accounting for income (income and expenses). Depending on the chosen taxation system, the form of the book is different, but the procedure for reflecting the proceeds is the same, since all entrepreneurs determine the income on a cash basis - the date the money was received at the cash desk or credited to the current account.

Column 1 indicates the date the income occurred. Columns 2 through 4 are intended to reflect income in them and reflect income received in foreign currency, recalculated in hryvnia.

The first part of the material on the foreign economic activity of entrepreneurs - read IN HERE.