As a result of this decision of the NBU, companies, when receiving foreign currency, have to sell it at an artificially reduced rate, which does not allow paying the private entrepreneurs fee in the equivalent of the market rate. In addition, when receiving currency, IT specialists (private entrepreneurs) themselves can sell it only at the rate set by the National Bank of Ukraine, while buying currency or paying with hryvnia cards abroad is already at the market rate. Thus, an “additional tax” (about 26%) on the income of IT professionals occurs. These changes pose direct risks to all export industries, including the national IT industry, which focuses on providing services to foreign businesses. Basically, there is a direct expropriation of a part of the IT professionals’ profits (by the exchange rate differences). The probable consequences of such a decision are:
- outflow of foreign currency income of private entrepreneurs who export services (including IT services) from Ukraine and accumulation of such income abroad;
- change of tax residency in other countries by IT entrepreneurs, which threatens to lead to a sharp drop in foreign currency income in Ukraine from IT exports from next month;
- transition of IT specialists who are abroad or can move there – from Ukrainian to foreign companies.
It is worth noting that the stable operation of the IT industry in the first quarter brought USD 2 billion of income to the country’s economy, allowed the IT sector to transfer more than UAH 1 billion for humanitarian purposes, IT business is one of those few who pay taxes in advance and on a regular basis purchases technical facilities, equipment and other necessities for our defenders. According to our updated data, during the War 77% of IT companies have attracted new customers, 56% of them expect the growth by 5-30% this year. 41% of companies forecast the preservation of existing volumes at 50-100%.
Realizing the risks and challenges the national IT industry is facing due to the aforementioned regulation of the NBU, the Association “IT Ukraine” addresses the Board of the National Bank of Ukraine with a request:
- To establish the exchange rate regime that takes into account the interests of export industries and allows returning to a floating exchange rate in a short term.
- To allow the sale of foreign currency earnings to exporters at the commercial rate with a gradual increase in this share.
- To retain the possibility of credit/deposit card payments and cash withdrawals abroad at the official NBU rate (+ 10%) within the equivalent of UAH 50,000 a month, and to allow banks to apply the commercial rate only above this amount, but with no restrictions on a sum.
We are concerned that the proposed measures will allow a compromise solution that will help maintain the stable operation of all export sectors of the economy, including the IT industry, and thus ensure regular foreign currency earnings from exports of computer services, which have the potential to grow even during the War.
IT Ukraine is the largest community of IT companies, uniting more than 110 companies and 77,000 Ukrainian IT specialists. The association combines the interests of business, government and international partners for the development of the IT industry in Ukraine. Together with participating companies, IT clusters and partners, it protects the interests of business and promotes the brand of Ukraine as a leading technological nation.
