Restriction on payment of currency contracts

LEGAL DIGEST, NEWS \ 15.04.2022

Russian organizations, when fulfilling obligations under contracts to foreign legal entities, can make an advance payment on it in the amount of not more than 30% of the entire amount of the contract.  

The said decision of the Central Bank of the Russian Federation entered into force on March 27, 2022 and is applied to the following types of contracts, the subject of which are:

• provision of services by a non-resident;
• performance of works by a non-resident, transfer of information, results of intellectual property, including exclusive rights to them.

Restrictions on prepayment amounts are not applied to contracts under which Russian organizations purchase from foreign companies:

• fuels and lubricants;
• food;
• material and technical stocks;
• other goods necessary for the exploitation and maintenance of vehicles, regardless of their type and purpose, in transit or at stopover or parking points;
• financial services, including insurance and reinsurance contracts.

The amendments also did not affect Russian organizations operating in the credit sector and state development corporations “VEB.RF”.

The amount of transactions within 30% of the amount of obligations under contracts is determined using the official exchange rates of foreign currencies to the ruble established by the Bank of Russia on the date of execution of orders for prepayment or advance payment.

However, if the contract cost is less than $15,000, it is possible to make an advance payment on it in full.

Please be reminded that the Government of the Russian Federation has approved a list of countries that commit non-amicable actions against Russia. The list of such states can be viewed at the link. According to the Government’s explanations, foreign organizations are prohibited from purchasing currency on the domestic foreign exchange market of the Russian Federation. But payments in rubles are not prohibited. Also, the prohibition is not applied to the payment of goods, works or services purchased abroad, to receiving currency as part of the payment of a loan, interest on it or punitive sanctions, receiving loans from non-residents.

In the matters of conducting transactions with resident companies of foreign countries, please contact Acsour experts.