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Azerbaijan, IRS to Ink Additional Confidentiality Agreement

Azerbaijan and the U.S. Internal Revenue Office (IRS) will sign an additional agreement on confidentiality under the intergovernmental agreement on implementing the Foreign Account Tax Compliance Act (FATCA) by Azerbaijani banks by September 30, 2015.

The news was announced by Azerbaijani Taxes Ministry.

15 Azerbaijani commercial banks have already joined the IRS, including the International Bank of Azerbaijan (IBA), Bank Technique, Zaminbank, Bank Avrasiya, Azer Turk Bank, Muganbank, Caucasian Development Bank, Kapital Bank, PASHA Bank, Gunay Bank, DemirBank, Xalq Bank, Turan Bank, NIKOIL Bank, and AtaBank.

FATCA imposes a 30 percent withholding tax on the payments of the U.S. source income made to non- U.S. financial institutions, unless they enter into an agreement with the U.S. IRS and disclose information about their U.S. account holders.

Legislation in some countries does not provide for and even directly prohibits the disclosure of the information of account holders. However, compliance with the FATCA by commercial banks in any country will help them avoid sanctions.

Azerbaijani Cabinet of Ministers adopted a decision in April 2014 on the need to conclude such an agreement with the U.S. A commission was created especially for this purpose.

As a result, Azerbaijan was included on the IRS list of cooperating countries on May 16, and the deadline for its financial institutions' registration in the system of U.S. tax authority was extended until December 31, 2014.

The finalization of the intergovernmental agreement, the completion of all necessary domestic procedures, and signing the document will take place prior to December 31, 2014, after which the state structures of Azerbaijan and the U.S. will conclude an additional document to regulate the practical organization of information exchange, ensuring privacy, and other issues.

Source: AzerNews

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