Bulgaria has officially signed Foreign Account Tax Compliance Act (FATCA) agreement with the US to improve international tax compliance.

The pact was signed by the Bulgarian minister of finance Vladislav Goranov and the US Ambassador to Bulgaria Marcie Ries.

The agreement will see Bulgaria becoming a part of the international exchange of information under the FATCA.

Under the agreement, Bulgarian financial institutions will provide their central authority with details of US account-holders, which will be passed on to the US Internal Revenue Service (IRS).

The accord comes just over six months after the two countries entered into a transitional in substance agreement, under which the US temporarily regarded Bulgaria as complying with the FATCA, pending the completion of final preparations in Bulgaria.

As per the FATCA law, failure by an FFI to disclose information on their US clients, including account ownership, balances and amounts moving in and out of the accounts, will result in a requirement to withhold 30% tax on payments of US-sourced income.