Russia, U.S. may hold next FATCA talks in Nov - source
MOSCOW. Oct 23 (Interfax) - Russia and the United States may hold a second round of talks on the Foreign Account Tax Compliance Act or FATCA, a U.S. law that requires banks to disclose information to the U.S. IRS on accounts held by U.S. taxpayers and companies affiliated with them, a source told Interfax.
The agreement on applying FATCA requirements may be signed in March 2014, he said.
The Finance Ministry did not comment on when the agreement might be signed.
A draft agreement between Russia and the United States was submitted to the Central Bank of Russia, to the National Payment Council and a copy of the draft has been published on the National Payment Council website.
The draft is a modified version of the type 1 agreement that the United States has signed with most European countries. The fact that the agreement is being drawn up reduces risks for Russian banks, which after the agreement is signed will receive FFI status, indicating that they are complying with FATCA, the National Payment Council says.
Information on U.S. taxpayers collected by Russian banks will be submitted via an authorized government body to the IRS and in exchange the United States will submit similar information to Russian tax bodies on Russian taxpayers.
Information on names, addresses, id numbers, account numbers and so on will be exchanged. Russian financial institutions should identify the accounts that need to be reported on and tell the Federal Tax Service about them as well as tell the tax service of any FATCA violations.
The Federal Tax Service and IRS should develop rules and procedures for automatic information exchange.
Finance Minister Anton Siluanov said this summer that Russia plans to complete FATCA talks in 2013.
Under the FATCA rules, financial institutions are supposed to register on the IRS portal by April 25, 2014 in order to be included in the first list of participating financial institutions to be published by the IRS; it was announced that this deadline is final. Failure to be included in this list could have negative consequences for Russian financial institutions due to the risk of being subject to the FATCA tax, as well as in terms of reputation. In light of this, Russia should sign an intergovernmental agreement with the U.S. by April 25, the Association of Russian Banks believes.
The United States extended for six months, to July 1, 2014, the deadline for compliance with FATCA. FATCA applies to all countries. FATCA has become a problem for Russian banks because in order to comply with its requirement, banks would, among other things, have to violate Russian banking secrecy and personal data disclosure legislation.
FATCA envisages two ways of complying with it: a bank can sign an agreement with the IRS on tax agent functions directly or - through exchange of information via the national tax service, which has a bilateral agreement with the United States.
Major European countries and Mexico and Singapore have already signed an agreement with the United States envisaging bilateral information exchange on taxpayers via national tax services.
Talks between Russia and the United States about FATCA began in May and are just in their initial phase, although since 2011 banking associations have tried to find out from the authorities what they need to do about FATCA.