Mandatory sale of hard-currency earnings
The Russian Ministry of Finance informed today that Russian residents will be required to sell 80% of hard-currency earnings received under foreign trade contracts. The decision is to be adopted today, February 28, 2022[1].
Foreign trade activity is not limited to commodity transactions and includes international trade in services, information, and intellectual property. This means that almost all hard-currency earnings may need to be sold.
The mandatory sale of hard-currency earnings under foreign trade contracts is not completely new for Russian currency regulation as such practice used to be in place up to 2007[2].
So, until 2007, Russian residents (individual entrepreneurs and organizations) had to sell within 7 working days some of their hard-currency payments received from non-residents for the transfer of goods, performance of work, provision of services, transfer of information and intellectual properties, including exclusive rights to intellectual property, to non-residents[3]. The law provided for a number of exceptions. For example, a resident had to sell hard-currency earnings only once the resident was able to fulfill its obligations under loan agreements and loan agreements concluded with residents of OECD or FATF for more than two years.
How the obligation to sell hard-currency earnings will be worded when it is introduced, and whether there will be any exceptions is not yet clear now. We will keep you informed.
If you have any questions or you would like to discuss this further, please feel free to email Anton Kabakov.
Truly yours,
[1] https://minfin.gov.ru/ru/press-center/?id_4=37781-ob_obyazatelnoi_prodazhe_valyutnoi_vyruchki_eksporterami
[2] Paragraph 1 of Part 3 of Article 26 of the Federal Law “On Currency Regulation and Currency Control”
[3] Article 21 of the Federal Law “On Currency Regulation and Currency Control”