On easing punishment for residents who violate the term for repatriating foreign currency income

On 9 November 2011, the Federation Council approved the law “On amendments to articles 3.5 and 15.25 of the Russian Code of Administrative Offences”.

The amendments that this law makes to the Russian Code of Administrative Offences are connected with the penalty under article 15.25(4) of the Code of Administrative Offences. Such penalty is imposed on suppliers that are Russian residents when they fail to receive, in due time, the proceeds in foreign currency from their cross-border contracting parties that are non-residents under Russian currency legislation.

At the moment, the penalty for residents is between ¾ and the entire amount of the proceeds that were not transferred to the bank account of the resident in accordance with the foreign trade contract irrespective of whether the transfer has simply been delayed or has not been made at all.

After the law comes into force the situation for residents will improve to a large extent: the amount of the penalty will depend on whether there has been a delay in crediting foreign currency from non-residents to the resident’s bank account, or it has not been credited at all.

If there has been a delay in transferring proceeds, the penalty amounts to 1/150 of the Bank of Russia’s refinancing rate applying in the period of the delay, such penalty being assessed for each day when the payment is overdue.

If the proceeds have not been transferred by the time the administrative body executes a protocol of the offence, the penalty will remain the same: between ¾ and the entire amount of the proceeds that were not transferred to the resident’s bank account.

If only a part of the proceeds has been credited to the bank account, such part will be subject to the late payment penalty of 1/150 of the Bank of Russia’s refinancing rate, while the outstanding part will be subject to a penalty of between ¾ and the entire amount of the proceeds.

Conclusions and recommendations

The amendments provide for less stringent liability under administrative legislation, so this will apply to residents that committed an offence before the law comes into force, but have not been charged the penalty at the level of ¾ to the entire amount of the proceeds.

For further details, please contact:

in Moscow – Elena Ovcharova, Head of the Administrative Defence of Business Group, at (495) 967-00-07 or by e-mail; Nataly Travkina, Senior Associate, at (495) 967-00-07 or by e-mail

in St Petersburg - Sergey Sosnovsky, Head of Tax Practice (St. Petersburg), at (812) 333-0717 or by e-mail