Global

Details

  • Service: Tax, Global Mobility Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 7/1/2014

Russia - FATCA implementing legislation 

July 1:  Legislation to implement the FATCA regime in Russia was signed into law on 30 June 2014.

According to a release from the Kremlin, the legislation (Federal Law No. 173-FZ) authorizes Russian financial organizations to provide foreign tax authorities information needed to collect taxes and fees relating to income of foreign taxpayers (with their permission).


The legislation does not apply to certain persons, including:


  • Russian citizens, unless they have citizenship or a residence permit in another country (except Kazakhstan and Belarus)
  • Legal entities incorporated in Russia that are more than 90% directly or indirectly controlled by the Russian citizens (including those with citizenship of Kazakhstan and Belarus), unless also possessing citizenship or a residence permit in another country

Summary

The FATCA implementing legislation provides that:


  • A foreign financial institution must inform the Russian tax authority of the account details of Russian citizens (including the account of entities controlled by them).
  • Russian financial institutions, in turn, must identify who are foreign taxpayers among their clients and report this information to the respective tax authority.
  • When a Russian financial institution reasonably (based on documents) suspects that a client is a foreign taxpayer, and this client does not provide certain necessary information about this status or refuses to issue a consent on the reporting the necessary information to the IRS, the financial institution may close the account.
  • Russian financial institutions must inform certain Russia government entities (e.g., the Central Bank, the tax authority) about their FATCA registration with the IRS.
  • Russian financial institutions must obtain consents from clients in order to report and share the client information.
  • Russian financial institutions must provide the information to Russian authorities (e.g., the Central Bank, the tax authority, etc.) for approval before sharing the information with a foreign tax authority (the Russian authorities have the right to restrict the transfer of information).
  • Penalties for non-compliance can be imposed up to U.S. $30,000.


For more information, contact a professional with the KPMG member firm in Russia:


Dmitry Chistov

+7 495 937 4477




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