Currency solutions

marchenkodanevych.com

Currency issues and how to deal with them.Possible solutions for foreign suppliers*

May 20, 2015

* Please note that this presentation is not a legal advice, but a general overview. Any particular situation shall be consider on a case by case basis.

Possible solutions


Compensation to importer

Shift to local currency invoicing

Shift to local currency transactions

+ control over prices

Compensation to importer (1)


Supplier

Distributor (Subsidiary) 1


Retailers

InvoiceUSD 100*

USD 100*** (purchased for

UAH 3,000)

* currency rate at the date of invoice:UAH 20 per 1 USD

** currency rate at the date of payment from retailer:UAH 24 per 1 USD

*** currency rate at the date of payment from distributors:UAH 30 per 1 USD

Credit note forUSD 33

Payment ~60 days after invoice

UAH 2,000**+ mark up

Compensation to importer (2)


• Relatively attractive to

distributors• In most cases it is

possible (and legal) to limit all distributors (on non-discriminatory basis) with mark-up level and to provide credit notes only after confirmation of relevant mark-up application

• No need to change format of invoicing and payments

• The currency deficit issue remains unsolved

• Retrospective discounts (credit notes) are under close focus of Antimonopoly Committee

Local currency invoicing (1)


Supplier



Retailers

InvoiceUAH

2,000*

USD 66.6*** (purchased for

UAH 2,000)





UAH 2,000**+ mark up


• Attractive for distributors• Usual currency of

payments• In most cases it is

possible (and legal) to limit all distributors (on non-discriminatory basis) with mark-up level

• The currency deficit issue remains unsolved

• Unusual format of invoicing

• No direct control over mark-up level

Local currency invoicing (1)

Local currency transactions (1)


Supplier



Retailers

InvoiceUAH

2,000*

UAH 2,000**+ mark upUAH 2,000 ***





Local currency transactions (2)


• Very attractive for

distributors• No issues with currency

deficit • Speeding up of all

payments• It is possible either to

exchange received UAH to another currency at receipt, or to transfer UAH to Ukraine (in case of established RepOffice here)

• Necessity to open UAH account abroad (not all banks do it, although some do, including Citibank, UBS etc.)

• Unusual format of invoicing and payments

• No direct control over mark-up level


Have questions? Please contact:

Borys Danevychpartner, attorney-at-law4-B, Ivana Franka str, office 49Kyiv, UkraineTel: +380 44 220 [email protected]

mailto:[email protected]

mailto:[email protected]

Law

Currency solutions