The government will require more data on the foreign transactions of Russian residents

The White House intends to tighten control over the foreign operations of Russian companies and individual entrepreneurs. To this end, a government resolution has been approved describing new requirements for the disclosure of reports on the flow of funds placed in accounts in foreign banks and other financial organizations, as well as on transfers without opening a bank account. According to Kommersant’s interlocutors and experts, the measure will primarily affect large businesses: adaptation to the sanctions regime and the easing of currency controls in 2023 allowed companies to build complex supply chains, while strengthening control will make it possible to monitor such transactions. Until 2022, it was assumed that such an opportunity would arise with the expansion of international exchange of tax information, but now the authorities will have to collect such data from Russian businesses.

The White House details control over the movement of funds of Russian residents, legal entities and small businesses abroad. “In order to implement measures to improve the balance of the foreign exchange market,” a government resolution (RD) was approved, expanding reporting within the framework of currency control (Kommersant has it), No. 1911 dated November 14 – it makes changes to the basic RD No. 819 back in 2005. According to it, Russian persons must quarterly report to the tax authorities on cash flows, as well as other financial assets (for example, securities, shares in companies) in foreign accounts or using foreign electronic means of payment (from 600 thousand rubles).

The updated rules also require tax authorities to receive information about revenue deposited in accounts abroad, as well as “about third parties who participate in mutual settlements in foreign economic activity.” Now, if there is cash flow, Russian companies and individual entrepreneurs must report only on credits and debits to the account, indicating only transaction codes. As follows from the document, if in the reporting quarter there were write-offs or receipts related to the execution of foreign trade or loan agreements accepted for registration by authorized banks in Russia (export contracts from 10 million rubles are subject to registration, and import and credit contracts – from 3 million rubles), now, in addition to data on transactions for all transaction type codes, you will have to indicate the volume of write-offs and credits of funds for the quarter, both in cash and non-cash form within the framework of the contract – indicating its “unique code”. As the Ministry of Finance explained to Kommersant, “this information allows the tax authorities to track the volumes of foreign currency remaining in exporters’ accounts in foreign banks, which, in turn, will help ensure transparency of control over the foreign trade operations of exporters.”

Resolution No. 1911 was signed as part of the implementation of the provisions of the presidential decree of October 11, 2023 “On the mandatory sale of foreign currency by certain Russian exporters” (applies to 43 exporters, the share of exports in revenue exceeding 60%). Also at the end of October, amendments to the law “On Currency Regulation” prepared by the Ministry of Finance were submitted to the State Duma – they oblige exporters from January 1 to report on currency transactions not only of the company itself, but also of foreign subsidiaries, a list of Russian resident companies falling under the new regulation , will not be published. At the same time, Resolution No. 1911 has a much wider scope – this is the first expansion of the detail of data on the implementation of currency legislation by all legal entities and individual entrepreneurs after in June 2022 the Government Commission on Foreign Investments allowed exporters to credit the currency received from non-residents under foreign trade agreements to their accounts abroad without obligatory return to authorized banks, that is, without repatriation.

Then the measure was supposed to make it easier for companies to adapt to the sanctions: in the context of complications in settlements between Russian and foreign banks, it turned out to be easier for companies to leave part of their revenue abroad and use it to pay for import contracts. “Obligations to return foreign currency earnings have been greatly simplified so that you can leave and buy from foreign currency accounts. The regulator does not really understand what is happening – we sell a lot for rubles and buy a lot for rubles. The Central Bank was sharply against multiple exchange rates, but in the current conditions you are actually issuing money and do not understand where it ends up. Previously, large businesses sold everything themselves, but now there are a bunch of small companies that seem to export, but no one advertises any affiliation,” explains Kommersant’s interlocutor. A representative of the foreign trade business, in an interview with Kommersant, also noted that companies were able to vary transaction prices (including within the group), but primarily use companies that “cannot be exposed due to sanctions risks.” The geography of supplies has also changed: for the first destination, exports can go to the CIS countries, and then further.

Reporting on foreign exchange transactions has also been simplified, although companies still submit transaction passports. At the same time, for failure to submit reports, violation of deadlines or submission of an unreliable report, Russian businesses face fines (up to 5 thousand rubles for officials and 50 thousand rubles for legal entities, in case of repeated violation – up to 40 thousand rubles and 600 thousand rubles. accordingly), but in relation to violations of currency legislation caused by sanctions, there is a moratorium on bringing to administrative liability, introduced in July 2022 and extended until the end of 2023, which really weakened control, the Federal Customs Service previously admitted.

Now Kommersant’s interlocutors, who are familiar with the discussion of the new regulation, note that we are talking about an attempt to build the government’s understanding of the flow of funds, including foreign ruble transactions. The discussion about the need to re-tighten currency regulation began against the backdrop of a weakening ruble; the authorities were concerned, in particular, that the move away from payments in dollars and euros had created a large market for ruble transactions, at least in friendly countries.

Note that the government’s work to collect data on foreign accounts and assets of Russian residents was actively carried out in 2014–2018 as part of deoffshorization campaigns and several capital amnesties – then it was assumed that data on those who “hide” accounts and assets abroad will still appear at the Federal Tax Service when the automated international exchange of tax information starts working. However, the need to counter the “Crimean” sanctions and subsequent sanctions in connection with the military operation in Ukraine de facto torpedoed the “globalization” of the tax sphere, and now the Russian authorities have to obtain data on their foreign activities from themselves.

Earlier, Kommersant’s interlocutors noted that the actual ability to monitor companies’ foreign operations is limited. In conditions of limited opportunities for information exchange with regulators from other countries, a requirement was introduced to submit indicative plans and schedules for the purchase and sale of foreign currency to the Central Bank and Rosfinmonitoring; representatives of the service will also be able to conduct inspections “on the spot”, but the volume of such inspections will not be comparable with the automated exchange of tax information.

De facto, the government will have to collect information using a “mosaic” method – comparing company data and information received by tax authorities during the previous stages of the fight against offshore companies and capital withdrawal. At the same time, as experts remind (see Kommersant-Online), carrying out currency transactions with violations may face significant fines (up to 40% or up to 100% of the transaction amount) or even criminal punishment, depending on the circumstances, and about the prospects for extension moratorium is not yet known.

Tatiana Edovina, Evgenia Kryuchkova, Oleg Sapozhkov