Changes in the currency legislation

In 2020, significant changes were made to currency regulation and currency control, as well as to liability for violations of the established procedure in this area. The overall tendency of the reform was aimed at easing the administrative burden on Russian exporters and importers in their foreign trade activities. The most significant amendments are discussed below.

Changed liability rules for non-repatriation of foreign currency earnings

For the first time, individual residents are listed as a separate category of persons held liable under Part 4, Article 15.25 of the Administrative Code of the Russian Federation. Previous revision of this regulation allowed only organizations, company officials and individual entrepreneurs to be held liable. Now, individuals who, for example, provide loans to non-residents or provide services to them, shall ensure that non-residents comply with deadlines for performing their counter-obligations to avoid risks of being brought to administrative liability.

Mitigated administrative liability for non-repatriation of foreign currency earnings

The fine for citizens, legal entities and entrepreneurs for non-crediting of foreign currency earnings was reduced and now it is from 3 to 10 percent of the amount of non-credited funds, if the amount of obligations under a foreign trade contract is determined in rubles and the ruble is specified as the currency of payment under the contract. Previously, the fine was from 75 to 100%.

In case of non-crediting of funds under other foreign trade contracts, as well as under loan agreements, the sanction for such persons shall be from 5 to 30 percent of the amount of non-credited funds.

For individual entrepreneurs and organizations, in case of non-return of foreign currency earnings under foreign trade contracts, the same gradation of fines is provided on the basis of Part 5, Article 15.25 of the Administrative Code of the Russian Federation.

At the same time, the procedure for calculating administrative fines for late crediting (returning) of foreign currency earnings remained the same. It is calculated as one hundred and fiftieth of the key rate of the Central Bank of the Russian Federation on the amount of funds credited (returned) to the Russian Federation in violation of the established deadline for each day of delay in crediting (returning) of such funds to the Russian Federation.

Minor delay in crediting (returning) of foreign currency earnings (up to 45 days inclusive) excludes the possibility of being held liable for non-repatriation of foreign currency earnings

Prior to changes made, Russian export companies and individual entrepreneurs were often subject to penalties for any even minor violations of terms of crediting foreign currency earnings to an account with an authorized bank, which in most cases were caused by non-resident counterparties and over which in most cases a resident exporter had no influence. As a result, Russian companies and individual entrepreneurs had to bear an additional financial burden, negotiate with foreign counterparties, execute a large number of additional agreements to contracts for “minor delays”, and submit additional agreements to authorized banks for registration. Introduced changes provide Russian exporters with an additional opportunity to settle problems with a foreign counterparty with no risk of getting a fine for circumstances that resident exporters had no influence over.

A similar period of 45 days is also provided for the correction of violations committed by residents that are related to settlements under foreign trade contracts, bypassing accounts with authorized banks, in cases not provided for by the currency legislation of the Russian Federation. Administrative liability under Part 1 or Part 4, Article 15.25 of the Administrative Code of the Russian Federation is excluded if a resident within 45 days from the date of crediting funds to his/her account with a foreign bank transfers the entire amount received to his/her account with an authorized bank. If during this period only part of the received amount is credited to an account with an authorized bank, then only the remaining funds in the foreign account will be the subject of the offense.

The legislation also introduces a new administrative offense for non-expatriation – liability for failure by a resident in due time to fulfill or terminate obligations under a foreign trade contract with a non-resident in cases where currency legislation allows non-crediting of foreign currency earnings to accounts with authorized banks. In this case, the offence is punishable by a warning or fine for legal entities and entrepreneurs in the amount of 5 to 30 percent of the amount of money owed to a resident from a non-resident, and for company officials – a warning or fine amounting from 20 to 30 thousand rubles.

Mitigated liability for violations of deadlines for submitting accounting and reporting forms for currency transactions and supporting documents

In accordance with the amendments, failure to comply with deadlines for submitting accounting and reporting forms for currency transactions (certificates of supporting documents), supporting documents and information when performing currency transactions is recognized as an administrative offense if the delay is more than 90 days. Sanctions for this element of offence include a fine for legal entities from 40 to 50 thousand rubles, and for their officials – from 4 to 5 thousand rubles.

Rules on administrative liability extended to accounts of residents with foreign financial market organizations

The legislation provides for the liability of residents for performing currency transactions, bypassing accounts with foreign financial market organizations other than banks, in cases where the use of such accounts is provided for by the currency legislation of the Russian Federation. It also introduces liability for currency transactions involving funds illegally credited to accounts with such organizations. In these situations, a similar sanction is imposed for illegal currency transactions in the form of a fine amounting from 75 to 100 percent of its amount. If an offense is committed by an official, the fine is set in the amount from 20 to 30 thousand rubles.

Control over the use of resident accounts with foreign financial market organizations other than banks is also tightened. Failure to comply with deadlines and/or the form of notification to the tax authorities about opening or closing of such accounts, as well as about changes in their details, is considered an offense. Moreover, the Administrative Code was supplemented with provisions on liability for violations of the procedure and deadlines for reporting on the flow of funds on accounts with such organizations.

Changes concerning foreign branches and representative offices

Article 12 of the Federal Law “On Currency Regulation and Currency Control” was supplemented with new grounds for crediting funds to foreign accounts of foreign representative offices or branches of resident organizations:

  • refund of previously made payments for returned goods, non-rendered (improperly rendered) service under transactions related to activities of a representative office or branch, except for foreign trade activities;
  • return of a deposit under a lease agreement (probably, the law refers to a security payment);
  • receipt of proceeds from the sale of property owned by a representative office or branch, except for proceeds from foreign trade activities;
  • insurance payments from non-resident insurers.

In general, most of the adopted amendments have a positive connotation for participants of the turnover. They will reduce excessive administrative pressure on residents in the field of currency regulation.

Ekaterina Sechkareva

Junior Lawyer

Tax and Legal Practice

Korpus Prava (Russia)

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