We inform you that on August 2, 2019, there were made amendments to the Law "On Currency Regulation and Currency Control". It was aimed at liberalizing a number of restrictions in foreign trade settlements. The law comes into force on January 1, 2020 (with the exception of certain provisions). Especially we would like to draw your attention to the following:
- The obligatory receipt of funds owed to Russian suppliers from a foreign company is now no longer necessary provided that the contract is denominated in rubles and pertains to the export of non-resource related goods, works/services, information and results of intellectual activity.
- By stages through 2024 some natural raw material export items such as oil and oil products, natural gas, coal, etc.) will be included provided that the export contract is denominated in rubles.
Banks and other currency control agents may request appropriate supporting documents as proved by the amendments to the law to ensure the proper fulfillment or termination of the contractual obligations.
In many ways this may relieve a significant burden on Russian suppliers of goods and services to their foreign clients. Under current regulations, Russian suppliers to a foreign client who were not paid, were doubly penalized: first, for non-receipt of money owned, and secondly by the Russian Customs or Tax Authorities for failure to receive hard currency (usually in the full amount due under the contract).
These changes may have the effect of making the ruble more widely used by Russian suppliers.
The Amendments do not apply:
1) to export revenue under contracts providing for the transfer to non-residents of wood, charcoal or timber;
2) for loans provided by residents to non-residents.
Additionally:
- The amendments expand the type of foreign financial institutions used by Russian residents that require notification to the Russian Tax Authorities. Previously only foreign owned bank accounts required such notification. Now, additionally brokerage accounts, custody accounts and others have been added to the list. Please note that the list is not inclusive and other types of financial institutions may also be subject to the new rules.
- The list of permitted foreign exchange transactions from the Russian account of one Russian resident individual to the foreign account of another Russian resident individual has been expanded.
- The list of allowed transactions by which a Russian resident may receive funds into their foreign account has been expanded (e.g. for individuals the receipt of payment for the sale of precious metals).
You can contact Emerging Markets Group experts to get more information.
