HSBC Treasury Management Profiles 2018 -

Current section, Introduction

Introduction

Russia’s economy is largely dependent on the export of natural resources, such as oil and gas (approximately 54 per cent of exports) and iron and steel (5.2 per cent). The collapse of oil prices in 2014, and the impact of US and EU sanctions against the country, saw the collapse of the ruble and the economy fall into recession. In 2015, GDP contracted 2.5 per cent, and in 2016 0.2 per cent. However, a recovery in oil prices (with oil reaching USD80 a barrel in May 2018) and an upturn in the global economy helped the country emerge from recession in 2017 – the economy expanded 1.5 per cent. Economic growth rose 1.3 per cent in Q1 2018 year-on-year, the sixth straight quarter of growth, (estimates from the Ministry of Economic Development estimate GDP increased 1.7 per cent year-on-year in April 2018) and with real GDP growth positive on a year-on-year basis for 12 months or more, indications are that macroeconomic stability is returning to Russia. Economic growth is predicted to reach 2 per cent in 2018, according to the Central Bank, on the back of higher oil prices (and a bolstered energy sector), low inflation (as of April 2018, consumer price inflation stood at 2.4 per cent year-on-year, below the central bank’s target of 4 per cent) and a current account surplus (in January-April 2018, according to Central Bank estimates, the current account surplus totalled USD41 billion). Additional oil and gas revenues are likely to see the budget post a surplus in 2018 instead of a deficit of 1.3 per cent according to the Finance Ministry.

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Legal and regulatory

  • Foreign exchange and domestic currency (RUB) accounts can be held by residents both domestically and abroad. Resident domestic currency accounts are convertible into foreign currency
  • Non-resident bank accounts are permitted in both foreign and domestic currency. Non-resident domestic currency accounts can be held abroad and are convertible into foreign currency
  • All transactions between residents and non-residents must be reported to the central bank
  • Proceeds from exports must be credited to residents’ foreign currency accounts. Export proceeds can only be kept in resident companies’ bank accounts outside Russia in very limited cases

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Taxation

  • Resident companies are taxed on their worldwide income
  • Non-resident companies are taxed on Russian-sourced income only. Russian PEs of foreign legal entities are taxable on profit attributable to the activity of the PE under rules that are generally similar to those applied to Russian legal entities
  • The maximum general corporate profits tax rate is 20 per cent

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Payment instruments and systems

  • Cash is an important payment medium in Russia, particularly for low-value retail and commercial transactions. Credit transfers are used for both high-value corporate and low-value retail payment transactions. Payment card use, particularly of debit cards, is rising, accounting for 71 per cent of all cashless payments in 2016. There were 60.6 million cards with an e-purse function in circulation at the end of 2016
  • Russia operates four national payment systems: BESP, an RTGS system; the CBR inter/intra-regional net settlement system for low-value payments; and Mir PS for card payments. Sberbank’s proprietary settlement system is also used by many Russian banks

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Cash management

  • Notional pooling, limited to RUB-denominated accounts only, is permitted between resident and non-resident accounts; interest-rate enhancement services are offered as an alternative. Cash concentration structures are limited to RUB-denominated accounts and are subject to certain legal and currency control restrictions and central bank reporting requirements apply
  • Companies typically collect funds via collection orders and preauthorised payment requests

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Electronic banking

  • Electronic banking is available in Russia. There is no bank-independent electronic banking standard. A number of banks offer the MultiCash platform
  • Internet and mobile banking services are provided by the country’s larger banks for both corporate and retail purposes. Adoption rates are increasing

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Sources:

  • UN Comtrade
  • Russian Federation Federal State Statistics Service
  • International Monetary Fund
  • Organisation for Economic Co-operation and Development
  • Central Bank of the Russian Federation

The materials contained on this page were assembled in June 2017 (unless otherwise dated).

 

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