Russian Prime Minister Dmitry Medvedev has asked the Russian Finance Ministry and the Central Bank to draft an agreement on bilateral cooperation to implement the US Foreign Account Tax Compliance Act (FATCA) by 20 January 2014.
Enacted in 2010, FATCA is designed to fight offshore tax evasion. It seeks to obtain information on accounts held by US taxpayers with accounts of more than US$50,000.
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Under FATCA, which comes into force on 1 July 2014, foreign financial institutions are required to disclose information to the US Inland Revenue Service (IRS), on all accounts held by US taxpayers, otherwise they will be subjected to a 30% withholding tax.
Russian premier issued this instruction following a November 28 session, which addressed the banking system’s development, Russia Beyond The Headlines reported.
Also, the Russian President Vladimir Putin called for a renewed crackdown on Russian companies that dodge taxes by registering in offshore jurisdictions.
An estimated US$111 billion of Russian money, or 20% of the country’s exports, is ‘lost’ offshore, Putin said in his annual state of the nation address.
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By GlobalDataHe said that in the future, companies with Russian owners but registered abroad would have to pay taxes into the Russian budget and the government would have to create a system to implement this.
"You want to have an offshore, you are welcome. But pay the money here," Putin warned.
Russian companies are notorious for their practice of registering abroad and using tax havens like Cyprus to avoid taxes at home.
