Today, Minister of Finance of Ukraine Oleksandr Danyliuk and US Ambassador to Ukraine Marie Yovanovitch have signed the Government Agreement on the Improved Application of Tax Rules and Application of the US Law “Foreign Account Tax Compliance Act” (FATCA) between Ukraine and the USA.
What is it about?
On July 1, 2014, the US Law “Foreign Account Tax Compliance Act” (FATCA) came into force which sets requirements to foreign financial organizations regarding the signing of a special agreement with the US Tax and Revenue Authority and control over accounts opened by American taxpayers at Ukrainian financial organizations.
The above Government Agreement was developed according to the model 1B and agreed with the USA to enable the implementation of the FATCA regulations.
Why is it important?
First, this Agreement is meant to disrupt financial manipulations and to prevent tax evasion. Second, it shall contribute to better information and experience exchange with the USA. Also, financial organizations from the partner countries shall be exempt from the compulsory collection of taxes on payments from other tax agents, collection of taxes on transit payments to other financial organizations within the respective country or from other partner countries. Also, they will be exempt from the obligation to close the accounts of customers not complying with the FATCA as well as from the compulsory collection of a 30% tax on transfers to the owners of such accounts.
Finally, the signing of this Agreement is also important for Ukraine, since it has already been signed by approximately 60 other countries including EU member states.
To implement the FATCA regulations, the Ministry of Finance will initiate amendments to a number of Ukrainian laws, the development and adoption of procedures for information exchange and reporting forms as well as the development of software for the collection and transfer of information.
“The Government of Ukraine will be taking steps to deepen and to widen the range of information exchanged under this Agreement – this shall contribute to the more effective law implementation and significantly reduce tax evasion. We will be doing our best to make cooperation between Ukraine and the USA in this area mutually beneficial”, Minister of Finance Oleksandr Danyliuk said.
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