L&M Finance Group
2020-01-14 15:03

FATCA LAWS ENACTED

On December 3, 2019, two Laws of Ukraine were adopted: “On Amendments to the Tax Code of Ukraine in connection with the ratification of the Agreement between the Government of Ukraine and the Government of the United States of America to improve the implementation of tax rules and the application of the provisions of the US Law on Tax Requirements for Foreign Accounts” ( FATCA), No. 323-IX of December 3, 2019 (entered into force on December 29, 2019) (hereinafter - Law No. 323-IX), and "On Amending Certain Laws of Ukraine in Connection with the Ratification of the Agreement between the Government of Ukraine and the Government of the United States of America to Improve Implementation tax rules and applying the provisions of the United States Foreign Account Tax Act (FATCA) Act No. 322-IX of December 3, 2019 (entered into force December 27, 2019) (hereinafter - Law No. 322-IX).
Among other things, Law No. 323-IX provides for amendments to the Tax Code of Ukraine regarding the definition of concepts: an accountable account and its owners, a financial agent and a financial account; features of reporting on accountable accounts; collection and receipt of tax information by regulatory authorities from financial agents; imposing a fine for failure to submit, reporting in violation or with inaccurate information or errors in reports on accountable accounts (this rule is aimed primarily at encouraging financial agents to comply with the law on the obligation to report on accountable accounts).
It is worth noting that the concept of “accountable account” is defined as a financial account that meets one of the following criteria:
  • the account holder is a non-resident individual;
  • the account holder is a legal entity - non-resident or representative office of a non-resident - legal entity; and
  • The account holder is a legal entity that is not a financial agent and whose ultimate beneficial owner (controller) is a non-resident individual.
A financial agent is a bank or certain non-bank financial institutions, and a financial account is an account opened by a financial agent or an agreement concluded by a financial agent (bank accounts, securities accounts, other types of accounts).
At the same time, the provisions of Law No. 323-IX stipulate that if an international agreement containing provisions on the exchange of information, the consent of which is provided by the Verkhovna Rada of Ukraine, or an interdepartmental agreement concluded on its basis, establishes other rules than those provided for by this law, the rules apply international treaty. The list of such international treaties is published on the official website of the central executive body that implements state tax policy.
In turn, Law No. 322-IX provides for amendments to:
  • The Law of Ukraine "On Banks and Banking" regarding the procedure for disclosing bank secrets; and
  • Law of Ukraine "On the depository system of Ukraine" in terms of access to information contained in the depository accounting system.
Such information will be disclosed in cases and to the extent determined by the Agreement between the Government of Ukraine and the Government of the United States of America in order to improve the implementation of tax rules and the application of the provisions of the United States Tax Accounts Requirements Act (FATCA) and other international treaties containing exchange clauses information for tax purposes, the consent of which was provided by the Verkhovna Rada of Ukraine, or interdepartmental agreements concluded on their basis.
Such innovations are a logical continuation of the global trend of deoffshorization, which has recently been gaining momentum.