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Printed from: http://petersburgcity.com/news/business/2004/01/13/law/|
Business news, 13.01.2004 13:58
New liberal currency law kind to individuals and companiesThe new Law on Currency Regulation and Currency Control was signed by President Vladimir Putin on Dec. 10, 2003 and has already come into force.
The new law actually introduces a number of novelties, which indeed make it look more liberal as compared to the 1992 Law on Currency Regulation and Currency Control. The new law sets a clear hierarchical system of currency control legislation. It limits the right of the government and Central Bank to issue normative acts in the sphere of currency regulation to those cases where the law directly prescribes it. Furthermore, the law takes over a liberal rule from the Tax Code: it states that all irresolvable doubts, contradictions and ambiguities of the currency legislation and acts of currency control agencies are to be interpreted in favor of individuals and companies.
Another fundamental novelty of the law is a legal approach that all operations of residents and nonresidents shall be subject to no restrictions, except for the exhaustive list of cases contained in the law.
The new law gets rid of the infamous requirement of obtaining Central Bank permissions for certain capital flow operations and, furthermore, it prohibits the need to obtain such permits in the future. Instead, the law introduces brand new tools of currency regulation in the form of reservation of funds, usage of special accounts, and pre-registration of accounts. Importantly, outbound investments by Russian residents through purchase of participation rights in charter capital of non-residents will be allowed.
The reservation system is briefly described in the law and is also subject to further clarification by the Central Bank and the government. Basically, residents and nonresidents may be obliged to transfer from 20 percent to 100 percent of funds involved in a currency transaction to an interest-free bank deposit for a set period of time.
Starting June 2005 residents will enjoy unlimited rights to open accounts in foreign banks in countries which are party to the Organization for Economic Cooperation and Development (OECD) and the Financial Action Task Force on Money Laundering (FATF), the only requirement being that they notify the Russian tax authorities that they are opening such a bank account.
It should be mentioned that the law reinforces the right of Russian individuals to purchase foreign securities denominated in hard currency and transfer of cash for these purposes subject to certain restrictions. The law also retains the requirement of drawing up a transaction passport for transactions between legal entities, repatriation and mandatory selling of 30 percent of currency gains by residents.
News source: www.sptimes.ru
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