A good and lively session – Russia remains a place where doing business is seldom boring.The main themes:Russia has many complex regulations, which keep changing.
Most participants have excellent local finance teams who keep on top of the regulatory issues – things work well if you do this.
The FX rate is highly volatile. Most participants hedge, with a general preference for offshore, though onshore also works, if you have the local team.
Hedging policies vary, especially for items such as intercompany loans and dividends.
Sanctions compliance drives a significant extra workload and adds yet more complexity – and the situation around Crimea is even more challenging.
The tax authorities are very aggressive, but things get resolved quickly, provided all the documentation is in order. Getting approval to pay royalties and some cross border intercompany services can prove difficult, though
.Intercompany loans can be made into and out of Russia, including cash pooling – though, as usual, there is bureaucracy attached. Most of the participants use one form or other of intercompany loan, in both directions, for cash management.
Most participants use dividends as a way of repatriating cash: there is a cost in terms of withholding tax, but it gets away from the bureaucracy attached to intercompany loans.
Bottom line: most, if not all, participants have healthy businesses in Russia. It is a challenging environment, and one which keeps changing – but, if you make the effort and have a good local team, these challenges can be managed.
CompleXCountries Treasury Peer Calls are expert-led confidential peer group calls in which a small group of expert treasurers compare their approaches to specialist treasury challenges, answer each others’ questions and combine knowledge. If you would like to know more about what we do, or to receive our Global Treasury Intelligence reports, please get in touch.