Providing in the standard purchase and sale contracts global amount of the supplies for the entire duration of the contract or for a certain period depends on (1) technical features of the procedure of customs declaration of goods, and (2) requirements of the Russian currency control.
1. Customs declaration of goods
By the importing of goods to the Russian Federation on the basis of a foreign economic purchase and sale contract for further commercialization of the goods in the territory of the Russian Federation a Russian company or an individual entrepreneur, who had concluded the foreign economic contract or on behalf of whom this contract had been concluded, always stands as the declarant for the purposes of the customs declaration of goods. Russian companies (distributors) generally insist on specifying in the purchase and sale contract the global amount of the supplies for the entire period of the contract duration or for a certain period (quarter, year, etc.), taking into consideration the fact that fewer goods may be delivered actually during this period according to the contract. These requirements arise from the following. If the contract does not specify the global amount and quantity of the supplies (framework agreement) or provides the minimum amount and quantity of supplies in a certain period, delivery of goods on the basis of the framework agreement or in the quantity and / or in the amount exceeding the minimum value set in the contract can be regarded by the customs authorities as a Non-contractual. Goods, provided to the customs declaration, are not allowed to release in the territory of the Russian Federation, if there are no documents, which prove the declarant’s right of possession, use and (or) disposition of the goods and the reasons of theirs importing in the territory of Russia. Thus, the condition of ‘global amount of the supplies’ is included in the standard purchase and sale contracts proposed by Russian companies, in order (1) to minimize the risk of consideration of the parcel of goods declared for the import in the territory of the Russian Federation as non-contractual supply and (2) to eliminate the need of providing additional documents confirming the reasons for importing those goods in the territory of the Russian Federation. An additional agreement to the purchase and sale contract or new purchase and sale contract can be provided to the customs authorities as such documents. It should be particularly noted that only the Russian company or individual entrepreneur is declarant for the supply of foreign goods in the territory of the Russian Federation for their subsequent sale on the same territory within the meaning of Art. 186 of the Customs Code of the Customs Union. In this connection the Russian buyer (distributor) fully borne all risks mentioned above.
According to the meaning of the Customs Code of the Customs Union and clauses 1 and 2 of article 4 (1) of the Agreement between the Government of the Russian Federation, Government of the Republic of Belarus and the Government of the Republic of Kazakhstan dated January 25, 2008 ‘On determination of customs value of goods crossing the customs border of the Customs Union’ in case of specifying the total value of goods in the foreign economic purchase and sale contract, the customs value of all goods, which are going to be supplied in the territory of the Russian Federation, can be determined during entering into the contract. Thus, the declarant may have a right to pay only once, during the import of the first batch of goods in the territory of the Russian Federation, customs duty for import in the territory of Russia all goods supplied under the contract period, based on the total customs value of goods. A lump sum payment of customs duty based on the total customs value of goods can be important, particularly in case of abruptly changes of the exchange rate, in which the price of goods is expressed, in order to minimize the impact of increasing of the exchange rate against ruble.
2. Currency control requirements
Indication of global amount of supplies in the purchase and sale contract and not the minimum amount of supplies in terms of value also facilitates the execution of the passport deal for currency operations under the contract between resident of the RF (distributor) and non-resident of the RF (producer of goods).
According to clause 2 of article 20 of the Federal Law dated December 10, 2003 N 173- FZ ‘On currency regulation and currency control’ passport deal must contain data required for providing accounting and reporting of currency operations between residents and non-residents, including the contract price. This information shall be recorded in the passport deal on the basis of residents’ supporting documents.
The global amount of supplies, which could be done during the period of duration of the purchase and sale contract is indicated for execution of one passport deal on all foreign currency operations under the contract which will be carried out by distributor pursuant to obligation to pay for delivered goods.
In case of discrepancy in the value of actually delivered under the contract goods and the total value specified in the purchase and sale contract it could be required to amend the passport deal, draw up a new passport deal, submit additional set of documents which prove foreign currency operations in the amounts beyond the value specified in the purchase and sale contract.
(1)’The customs value of goods imported into a single customs territory of the Customs Union is the value of the deal that is the actually paid price or the price due to be paid for the goods when sold for exportation to a single customs territory …’ (clause 1 of article 4 of the Agreement).
‘The actually paid price or the price due to be paid for the imported goods is the total sum of all payments for these goods carried or due to be carried by the purchaser directly to the seller or in favor of the seller’ (clause 2 of article 4 of the Agreement).