The Russian government has allowed a draft law initiating the process of information exchange with foreign tax authorities on May 14, 2014. The law introduces the responsibility of Russian credit organizations, brokers, depositaries, insurance companies, management companies of investment funds and non-governmental pension funds to give information to the foreign tax authorities and tax agents that are needed for withholding tax purposes of their clients who have bank accounts in Russian financial institutions. It was also prepared in order to allow Russian financial institutions to satisfy FATCA requirements.
This law proposes some changes to several federal laws related to banks and banking activity, securities market, investment funds, non-governmental pension funds, insurance organizations situated in Russia and foreign exchange regulations and controls. From July 1, 2014, Russian financial institutions apply a 30% withholding tax of from any US-sourced income transferred to US taxpayers’ bank accounts in Russia. It may create risks as because these institutes do not provide sufficient information regarding US tax authorities.
