On 29 October 2019 the Parliament of Ukraine ratified the Agreement between the Government of the United States of America and the Government of Ukraine to Improve International Tax Compliance and to Implement FATCA (“Agreement”).
The Agreement shall enter into force on the date of Ukraine’s written notification to the United States that Ukraine has completed its necessary internal procedures for entry into force of the Agreement.
In turn, certain draft laws aimed at amending provisions of the following effective Ukrainian legislation to ensure Ukraine’s compliance with the obligations envisaged by the Agreement are still to be adopted:
Below we have summarized the main obligations taken by Ukraine under the Agreement:
1. Ukraine is obliged unilaterally obtain information about all reportable accounts and automatically exchange respective information with the US;
2. Obligation to collect respective information is to be performed by the reporting financial institutions of Ukraine, duly registered with the US Internal Revenue Service (“IRS”) in which the reportable account was opened;
3. Reportable account is deemed to be a financial account that was opened in the reporting financial institution of Ukraine and is owned by the US citizen or institution controlled by the US citizen;
4. Information to be obtained and exchanged includes the following:
5. First exchange of the information is to be made with respect to 2014 and all subsequent years and is to be made before September 30th after the Agreement enters into force.
6. The reporting period for all subsequent information exchange is deemed to be a calendar year;
7. Reporting financial institutions of Ukraine failing to perform its reporting obligations under the Agreement may be subject to IRS 30% withholding from any payments made through the US banking system or banking system of the partner jurisdiction, as well as through the foreign financial institution applying the Agreement.
KPMG recommends analysing the impact of the amendments introduced by the Agreement on your current business activity to identify the following:
If you are interested in obtaining a detailed advice on impact of the Agreement on your business activity or you have any concerns on application of certain Agreement’s provisions or other international tax issues, we are pleased to schedule a free of charge call with Oleksandr Boboshko, Head of International Tax Practice, Director of KPMG in Ukraine.