The Evolution of Foreign Exchange Regulation and FX Control in Russia and the Prospects for Continued Liberalization of FX Legislation

Abstract

After thirty years of continuous evolution, following the conceptual reform in 2004–2007 and subsequent easing, the Russian system of FX controls has come to a point where many administrative barriers have already been removed, the residents’ duties to repatriate proceeds from export of goods, except for FX proceeds from raw materials, are being cancelled, and bureaucratic procedures have been streamlined. At this point, the question is raised of what other steps in the field of liberalization of FX controls can be taken in the first place to achieve the ever more urgent goal of developing nonresource exports. The article analyzes the purposes of regulation, describes the evolution of the system, examines experts’ opinions regarding the course of reforms, and concludes with a view of the rational prospects for reforming the system. The central problem is the continuation and expansion of the automatic exchange of financial information between the tax authorities of Russia and foreign countries, which, in particular, would help limit fiscal risks when eliminating the remaining residents’ repatriation duties.