Russia has stepped up to the plate is one of the 50 plus nations negotiating a FATCA deal with the US.
Apparently Russian Finance Minister Anton Siluanov has suggested he can sign a FATCA joint agreement with the US on behalf of the other main BRICS emerging economies – including China, Brazil, India and South Africa, Vedomosti, a leading Russian daily newspaper has reported.
Although the US is keen to pursue an agreement with Russia, the chance to sign a multinational agreement was spurned in favour of separate negotiations with each country.
Russia has hinted at seeking a FATCA treaty that lets banks report to the nation’s Federal Tax Service, which will forward information to the IRS.
China, India and South Africa have also agreed in principle to signing intergovernmental agreements, according to reports in Washington.
FATCA – the Foreign Account Compliance Tax Act – is due to come in to force in January 2014 as the US Treasury has become overwhelmed with a flood of requests to sign intergovernmental agreements.
Britain has already signed the first agreement.
FATCA is a tax law that requires foreign financial institutions to feed details of their US taxpayer clients and their financial affairs to the US Internal Revenue Service (IRS).
Since President Barak Obama signed of the law in 2010, FATCA has developed to become the framework of an international two-way tax superhighway giving the US information about taxpayer assets abroad, while compiling and sending the same data about other nation’s taxpayers the other way.
Foreign financial institutions that fail to comply with the act face withholding taxes of up to 30% in the US on their earnings.
Some instructions are asking US taxpayers to move their accounts so they do not have to comply with FATCA, but the move seems pointless as the world’s leading economies are embracing FATCA as a way to raise extra revenues.
Vedomati also reports that Russian deputy prime minister Igor Shuvalov plans to discuss a FATCA treaty on a forthcoming visit to Washington DC.
“By working cooperatively with foreign governments and financial institutions, we are intensifying our ability to combat tax evasion while minimising burdens on financial institutions,” said Treasury Assistant Secretary for Tax Policy Mark Mazur.
More countries are expected to join the queue for inclusion in the FATCA network, leaving some financial centres in the Middle East and South America standing alone outside the network.