FATCA IGA Talks between Russia and the United States Stall

With less than two months until FATCA becomes effective, negotiations between the United States and Russia over the terms of an Intergovernmental Agreement to implement FATCA for Russian Financial Institutions have apparently stalled.

On April 11, Russian Finance Minister Anton Siluanov met with U.S. Secretary of the Treasury Jack Lew in Washington to discuss a number of financial matters, but Siluanov indicated that the most pressing discussion points during the meeting concerned the prospects of signing an IGA as soon as possible. Progress on the agreement reportedly stalled in early April, about the same time as tensions between the United States and Russia over Crimea and the Ukraine escalated. Russia is preparing amendments to its local laws that would allow banks to provide information on the Russian accounts and transactions of Americans indirectly to the U.S. IRS and to close accounts of non-compliant customers. If an IGA between the United States and Russia is not agreed to in substance by July 1, Russian financial institutions would have to register with the United States and enter into an agreement with the IRS to report account information directly to the IRS or suffer a 30% withholding tax on payments of U.S. source dividends, interest and similar income commencing July 1.

See: Russian Finance Minister Concerned with Impasse in U.S. FATCA Negotiations.See also:Cabinet FATCA Materials (for Cabinet subscribers only).For more information, please contact Daniel Mulcahy and Mark Howe.