UPDATE. Mandatory sale of hard-currency earnings
Events are developing rapidly, and the President of Russia signed yesterday (February 28, 2022) a decree putting in place special economic measures in connection with the unfriendly actions of the United States of America and foreign states and international organizations that have joined them. This decree requires sell 80% of hard-currency earnings[1].
So, according to the decree:
- Residents must by March 3, 2022 inclusive sell 80% of hard currency credited to their accounts from January 1 to February 28, 2022 under foreign trade contracts concluded with non-residents for transfer of goods to non-residents, provision services to non-residents, performance of work for non-residents, transfer of intellectual properties to non-residents, including exclusive rights to intellectual properties;
The question of what to do if there are no hard-currency earnings on the account as of February 28, 2022 following the settlement of invoices to foreign suppliers remains open.
- From February 28, 2022 onwards, residents will be required within three days of the date of payment to sell 80% of hard currency credited to their accounts under foreign trade contracts concluded with non-residents for transfer of goods to non-residents, provision of services to non-residents, performance of work for non-residents, transfer of intellectual properties to non-residents, including exclusive rights to intellectual properties.
In addition, as decreed by the President of Russia, residents will from March 1, 2022 be banned from:
- Providing loans in hard currency to non-residents;
- Transferring hard currency to their accounts (deposits) opened with banks and other financial organizations located outside Russia, as well as making money transfers without opening a bank account using electronic means of payment provided by foreign payment service providers.
The liability for failing to comply with these measures concerning the sale of hard-currency earnings is yet to be determined.
It should also be noted that these measures – at least those regarding the sale of hard-currency earnings for the period from January 1, 2022 – are, in our opinion, contrary to Federal Law On Currency Regulation and Currency Control as this law bans the issuance of retroactive acts establishing new obligations for residents and non-residents. Having said that, the prospects of challenging these new requirements in court are not great and may not yield much success.
If you have any questions or you would like to discuss this further, please feel free to email Anton Kabakov.
Truly yours,
[1] http://publication.pravo.gov.ru/Document/View/0001202202280049?index=0&rangeSize=1