By Yulia Mazur, Partner,
Head of Accounting, Alinga Consulting Group
Control over transactions between residents and non-residents, over inflow of foreign currency into Russia and its outflow is a part of the state's financial policy. The state’s interest in corporate and private currency contracts is justified. Removal of capital from the country is a plague for any national economy, and fictional currency contracts without actual transactions are a simple and elegant method of enabling capital flight.
The desire to prevent this and a need for information about currency flow result in the need for currency controls over cash payments in the state’s financial system. Regulation on the interactions between parties and procedures for documenting transactions are regulated by Federal Law #173 “On Currency Regulation and Currency Control” from December 10, 2003. According to the aforementioned law, payments in a foreign currency between residents of Russia are prohibited.
It is necessary to pay special attention to documentation for currency transactions between residents and non-residents as in such cases procedures are determined by a type of agreement between the parties – whether it is a loan agreement or purchase and sale contract. Of interest are the contract value, contract currency, and direction of the transaction. For your convenience we have created a how-to article on fulfilling currency control requirements in two tables. The first table presents cases when a resident is a source of monetary funds in a foreign trade contract, and the second table shows the opposite situation when a resident is a receiving party for monetary funds.
These tables are available on the Russian version of our site.
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