The Ministry of Finance welcomes ratification of the FATCA agreement

The Parliament of Ukraine ratified the Agreement between the Government of Ukraine and the Government of United States to improve tax compliance and the application of the US Foreign Accounts Tax Law as well as related draft laws No. 2102 and No. 2103.

On February 7, 2017 in Kyiv, Ukraine and the United States signed an Agreement on the Improved Application of Tax Rules and Application of the US Law “Foreign Account Tax Compliance Act” (FATCA).

In order to implement the Agreement and regulate the procedure for the implementation by Ukrainian financial institutions the requirements of the FATCA law, there were elaborated amendments to Ukrainian legislation, namely, to the Tax Code and the Laws "On Banks and Banking" and "On the Depository System of Ukraine".

The Law No. 2102 amends the Law of Ukraine “On Banks and Banking” in part of the procedure for disclosing banking secrecy and the Law of Ukraine “On the Depository System of Ukraine” in terms of access to the information contained in the depository accounting system. The procedure for disclosure of such information in the first case is established by the National Bank of Ukraine, in the second case by the NSSMC approved by the Ministry of Finance and the State Tax Service.

The Law No. 2103 amends the Tax Code of Ukraine with respect to the definition of concepts of:

• the affiliated account and its owners, the financial agent and the financial account;
• considerations on reporting on affiliated accounts;
• the collection and receipt of tax information by the controlling authorities from financial agents;
• the imposition of a fine for false reporting on affiliated accounts.

Both draft laws are being prepared for the second reading.

Ratification of the Agreement on the Application of FATCA Provisions and Adoption of draft laws No. 2102 and No. 2103 ensures compliance with the requirements of the FATCA law in Ukraine through the implementation of internal reporting and the automatic provision of information to the US State Tax Service on accounts opened by US taxpayers in Ukrainian financial institutions.

The provision of similar information by the US Tax Service regarding accounts opened by taxpayers of Ukraine in US financial institutions is not provided for in the Agreement.

Therefore, the automatic exchange of information will be unilateral, but Ukraine will be able to consult with the United States on amendments to the Agreement for the bilateral exchange of information.