One of the main issues facing Russian financial institutions is the fact that recent legal obstacles do not allow them to follow the US Foreign Account Tax Compliance Act (FATCA) in Russia by entering into direct contracts with the Internal Revenue Service (IRS). Therefore, Russia may implement the rules to comply with FATCA via the intergovernmental approach. To sign an intergovernmental agreement (IGA) between Russia and the United States by the end of this year is the plan that was confirmed by the Russian Finance Minister. Russian legislation would have to be enacted to bring FATCA rules into force in Russia if the contract signed.
Considering the impact that FATCA has on the authentic, accounting, technology, tax and investor relations fields of financial institutions, much remains to be done by financial institutions in order to be able to follow FATCA rules by the effective time of FATCA under Russian legislation. In this aspect, Russian financial organizations and the government should profit from extra 6 months delay in the key timeline for implementation of many FATCA provisions, which was announced by the US Treasury and the IRS on July 12, 2013 in Notice 2013-43. The first date of implementation of FATCA requirements has moved to 1 July 2014.
