Russia’s government is taking steps to sign its first Foreign Account Tax Compliance Act (FATCA) Intergovernmental Agreement with the U.S. In June 2012, Russia’s National Payment Council (NPC) sent a letter to Prime Minister Dmitry Medvedev requesting that he develop a mechanism to comply with FATCA. At a follow-up meeting, the NPC came up with three ways Russia could comply with FATCA:
1. Sign an Intergovernmental Agreement with the U.S., similar to Switzerland and Japan, which allows the country’s banks to enter into separate agreements with the Internal Revenue Service (IRS), as well as provide the IRS account and identification information on U.S. taxpayers.
2. Sign an Intergovernmental Agreement with the U.S that allows the country’s banks to disclose the information to a centralized tax bureau which then submits the information to the IRS. This option has been implemented in France, the U.K., Germany, Italy, Spain and the Netherlands.
3. Sign an Intergovernmental Agreement with the U.S and require Russia’s financial institutions to withhold a 30% tax from any U.S. owned account that refuses to cooperate with the IRS.
To implement any of the three proposals, Russia will need to pass new national laws.
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