Russian Ministry of Finance has proposed a law that allows banks to comply with the US Foreign Account Tax Compliance Act (FATCA) without closing the accounts of their customers.
Under the amended law, Russian banks will not have the right to levy the 30% tax on cash transfers, but will allow them to pass information about their US account holders to the US tax service as well as to other companies authorized to levy taxes, according to newspaper Kommersant.
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The new legislation will enable banks to avoid clients that do not provide the information needed to transfer funds to foreign tax services or give permission to withhold foreign taxes.
Under the FATCA law, foreign financial institutions (FFIs) will require to report to the IRS information about financial accounts held by US taxpayers, reported Kommersant.
Non-disclosure of information by an FFI will result in a requirement to hold back 30% tax on payments of US-sourced income.
As part of the move, the US Treasury Department has extended the registration date for foreign financial institutions (FFIs) to May 5 from April 25.
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