FATCA, due to be enforced for Russia on 1 July 2014, will minimize US tax loss caused by offshore schemes used by Americans to avoid tax. The Act requires foreign banks to report on US clients to the IRS.

“The type of agreement we discussed was mutual data exchange. According to it, Russian banks are required to report on American tax residents and their accounts through the Federal Tax Service, and US counterparts will also report to Russia the details of Russian accounts in the USA and related transactions”, said the official.

According to Trunin, the document has been approved and passed to the Russian Government for greenlighting.

If the document passes, Russian banks will not have to submit reports directly to the IRS, this will be taken care of by the Federal Tax Service.

“If we do not sign, and if banks do not get a registration number by 1 July, failing to participate in FATCA will result in penalties”, said Trunin.

The agreement has been drafted in accordance with Point 63 of the International Financial Center and Investment Climate Change Roadmap, approved by the Russian Federation Government Resolution 1012-R of 19 June 2013.

Project Group №3