Ukraine will help prevent tax evasion by U.S. citizens under a new intergovernmental agreement signed by U.S. Ambassador Marie L. Yovanovitch and Ukrainian Finance Minister Oleksandr Danyliuk on Feb. 7.
According to the agreement, Ukraine will introduce provisions of the U.S. Foreign Account Tax Compliance Act to enforce the requirement of U.S. citizens living outside the U.S. to file yearly reports on their non-U.S. financial accounts.
Ukrainian banks will automatically share information about financial accounts and the assets of U.S. citizens with the Ukrainian authorities, who will pass it onto the U.S. Internal Revenue Service.
Details of the agreement and how it will be implemented have yet to be released.
Ukraine and the United States have been in talks about introducing support for FATAC provisions in Ukraine since 2013.
Tetyana Berezhna, a senior associate at law firm Vasil Kisil and Partners, told the Kyiv Post that, going by what is known from previous talks, this is a one way agreement, and U.S. institutions will not be sharing information with the Ukrainian authorities.
She said that a special department would be established within the Ukrainian Finance Ministry or the State Fiscal Services to collect and transfer the information.
“In general it is a positive step, which will promote the exchange of information and experience in exchanging information,” said Berezhna. “All these procedures will require new software, which will upgrade the procedures of the Ukrainian authorities.”
Some Ukrainian banks already share information with the U.S. tax authorities, but the new agreement will enshrine the practice in Ukrainian law, said Berezhna.
But she cautioned that the effectiveness of the agreement would only become clear when the implementation plan is published.
“The United States and Ukraine have developed a very strong partnership on tax administration issues, and I’m pleased that our work on FATCA will further enhance our efforts in this sphere,” said Yovanovitch, according to a statement issued by the U.S. Embassy in Kyiv on Feb. 8.
Since enacting FATCA in 2010, the United States has signed 94 intergovernmental agreements related to the act, according to the U.S. Treasury’s website.
