On 7 February 2017, the Minister of Finance of Ukraine and the US Ambassador to Ukraine signed a treaty on Ukraine's performance of the US Foreign Account Tax Compliance Act (FATCA) (the Treaty). According to the Ministry of Finance of Ukraine, the Treaty is based on the Model 1B Intergovernmental Agreement.
FATCA introduces duties for foreign financial institutions to register with the US Internal Revenue Service (IRS) to report on accounts held by US persons or companies, where US persons hold substantial corporate interests.
Many Ukrainian banks have already voluntarily complied with FATCA obligations for many years. Once the Treaty comes into effect, FATCA compliance will be obligatory for all Ukrainian banks, insurance companies and other financial institutions that will then be required to report the information about Reportable Accounts to Ukrainian authorised government bodies, where it would be collected and transferred to the IRS on automatic basis. FATCA allows the IRS to cross-check on financial reporting by US citizens and corporations.
The Treaty needs to be ratified by the Ukrainian Parliament through adoption of a law to become mandatory in Ukraine. All other necessary laws and regulations with respect to the Treaty's implementation are yet to be adopted as well.
We will monitor the situation and will keep you posted on further developments.
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