This draft law is intended to create a legal framework for expanding the use of the Russian Federation currency in foreign trade settlements, formalising the status of the Russian rouble as a regional currency and an instrument of international settlements in the light of current trends on the global markets and liberalising the patterns of resident accounts with banks outside Russia, as well as for gradually cancelling the obligatory repatriation of export revenue from foreign trade transactions between residents and non-residents denominated in Russian roubles.
The draft of the Federal Law On Amendments to the Federal Law On Currency Regulation and Currency Control concerns the liberalisation of foreign settlement constraints for residents using accounts (deposits) with banks outside Russia and the repatriation of earnings (hereinafter referred to as the Draft Law) was prepared by the Ministry of Finance in keeping with the federal project Systemic International Cooperation and Exports Development Measures under the International Cooperation and Exports national project.
The intention of the Draft Law is to create a legal framework for expanding the use of the Russian Federation currency in foreign trade settlements, formalising the status of the Russian rouble as a regional currency and an instrument of international settlements in the light of current trends on the global markets and liberalising the patterns of resident accounts with banks outside Russia, as well as for gradually cancelling the obligatory repatriation of export revenue from foreign trade transactions between residents and non-residents denominated in Russian roubles.
The Draft Law will lift constraints on the transfer to resident accounts with banks outside Russia of monies paid out in keeping with foreign legislation, bypassing accounts with authorised banks, in the form of earnings from the sale of precious metals kept on resident accounts with foreign banks.
The Draft Law also stipulates the transfer of monies which resident individuals had placed in trust with a non-resident trust manager to the accounts of these resident individuals with banks located in the member states of the Organisation for Economic Cooperation and Development (OECD) or the Financial Action Task Force (FATF).
In addition, the Draft Law expands the list of approved currency transactions between residents to include the transfer of foreign currency in payment for goods, work, services and information, as well as for intellectual property and exclusive intellectual property rights, from the accounts the resident individuals, who reside for over 183 days altogether per calendar year outside Russia and who engage in business transactions without establishing a legal entity as per the legislation of the host country, have with authorised banks to their accounts with foreign banks.
Another amendment provides for permitting the transfer of unlimited funds from non-residents to the accounts of resident individuals with banks in the OECD or FATF countries which act in compliance with the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information dated 29 October 2014 or any other international agreement on the exchange of financial information they signed with the Russian Federation.
In light of the common practice when residents open accounts not only with banks but also with other financial institutions outside Russia, the Draft Law intends to extend the requirements on the notification of the local tax authorities about the opening, closing or any changes concerning their accounts to include all of the residents’ accounts with financial institutions outside Russia. Moreover, monies can be transferred to or from the resident accounts with such institutions in the cases specified by the Central Bank of Russia.
Under the Draft Law, resident individuals do not have to inform the tax authorities about the movement of resources on their accounts with a bank outside Russia in the OECD or FATF countries taking part in the exchange of financial information, but only if the total amount of funds transferred to or from such accounts in the reporting year (or the closing balance) does not exceed 600,000 roubles or an equivalent amount in a foreign currency.
The non-bank financial institutions, which are subordinate to the Bank of Russia, that open accounts with banks and other financial institutions outside Russia must submit their financial reports to the Bank of Russia.
The Draft Law also stipulates that the list of OECD or FATF countries that exchange financial information, as well as amendments to this list, must be published on the official website of the Federal Tax Service of Russia.
The Draft Law provides for cancelling as of 1 January 2020 the requirement on the obligatory repatriation by residents of the rouble-denominated export earnings from non-resource exports, plus the gradual lifting of this requirement for resource exports.
The repatriation requirement remains valid for foreign trade agreements (contracts) on timber products signed between residents and non-residents, which are denominated and stipulate payments made in Russian currency. This decision is based on the high crime rate and numerous violations of the foreign currency legislation exposed by the customs authorities in this sector.
This Draft Law was discussed and approved at the Government meeting on 13 June 2019.