Talks with Russia on an intergovernmental agreement (IGA) in connection with the FATCA legislation have been suspended by the US. The aim of the agreement if reached would be to enable foreign financial institutions (FFIs) in Russia to comply with FATCA obligations by reporting in respect of accounts held with them by US individuals. If an FFI fails to disclose the relevant information about accounts of US individuals they would be required to withholding 30 percent tax from US source income paid.
In the absence of an IGA FFIs in Russia could still register with the IRS under the FATCA legislation but unless the agreement is signed they will not be in a position to share details with the IRS directly or to withholding the tax as required.
