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. Last Updated: 07/27/2016

Central Bank Outlines Import Payment Rules

Recently issued Russian presidential decree No. 1163, "On Priority Measures for Strengthening the System of Currency Control in the Russian Federation," and Joint Instruction No. 30 of the Central Bank of the Russian Federation and the State Customs Committee of the Russian Federation, "On the Method for Realizing Currency Control Relating to Substantiating Payments in Foreign Currency for Imported Goods," which became effective Jan. 1, 1996, require an import transaction passport for import contracts involving the sale of goods (excluding ruble, barter and intra-CIS transactions).

Instruction No. 30 provides rules for three payment methods: payment after customs clearance; payment upon shipment to Russia, prior to customs clearance; and prepayment (before shipment).

For payment after customs clearance, the importer's bank must compare the import transaction passport with the customs declaration and the contract for the goods being imported. If the information in these documents coincides, payment is permitted.

Where payment is made upon shipment, prior to customs clearance, Instruction No. 30 requires the importer to provide its bank with documents confirming shipment of the goods to Russia. The importer's bank must match these documents to the passport prior to payment.

In the case of prepayment, Instruction No. 30 requires the importer's bank to issue a special guarantee letter making the bank jointly responsible with the importer for nondelivery of goods and nonreturn of any prepayment. The instruction permits the bank to require a security from the importer to ensure entry of the goods into Russia.

The Central Bank has issued a letter further to Instruction No. 30, Letter No. 229, suspending the application of the rules applicable to the second and third payment methods. Thus, applicable procedures for these two payment methods remain uncertain.

One consequence of the new currency rules is to prohibit payments in excess of the contract value of the imported goods, potentially restricting payments under commissionaire sale structures for sales above the price set by the principal. The new rules also put into question the ability of foreign legal entities to receive foreign currency payments from consignment sales in Russia. Finally, until further guidance is issued by the Central Bank and the State Customs Committee, and until banks become more familiar with the application of the new rules, importers will need to work very closely with their banks in planning purchases of goods from abroad.

Alexander Bychkov and Alexander Chmelev are attorneys in the Moscow office of Baker & McKenzie.