Tax Banking & Finance Kyiv Client Alert April 2015 Ukraine Readies to Sign FATCA Intergovernmental Agreement with the U.S. Recent developments On April 22, 2015, the Cabinet of Ministers of Ukraine approved the draft Intergovernmental Agreement with the U.S. Government on the Improvement of Tax Compliance and Implementation of the U.S. Foreign Account Tax Compliance Act (FATCA) (the "IGA") authorizing the Minister of Finance of Ukraine to sign the Agreement. Implications By signing the IGA, Ukraine undertakes to report to the U.S. Internal Revenue Service ("IRS") targeted information about the U.S. accounts maintained by any and all financial institutions based in Ukraine. Under the IGA, Ukrainian financial institutions would have to report the targeted information about the U.S. accounts maintained by such institutions, likely, to the Ministry of Finance of Ukraine, which, in turn, would report such information to the IRS on an automatic basis. While the IGA raises the FATCA obligations to the intergovernmental level, 117 Ukrainian banks and financial institutions have already voluntarily registered with the IRS with a view to qualifying as cooperating financial institutions and introduced the FATCA related requirements to their internal procedures. The signing of the IGA is supposed to kick-off the process of implementation of the appropriate Ukrainian legislation that is expected to remove all concerns as regards the compliance by the Ukrainian banks with the local legislation when reporting individually to the IRS. FATCA was enacted in 2010 by the U.S. Congress to target non-compliance by U.S. taxpayers using foreign accounts. FATCA requires foreign financial institutions to report to the IRS information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. On June 26, 2014, Ukraine has undertaken to conclude IGA for implementation of FATCA. www.bakermckenzie.com For further information please contact Hennadiy Voytsitskyi, Partner +380 44 590 0101 Hennadiy.Voytsitskyi@bakermc kenzie.com Ihor Olekhov, Partner +380 44 590 0101 Ihor.Olekhov@bakermckenzie.c om Baker & McKenzie Renaissance Business Center 24 Vorovskoho St. Kyiv 01054, Ukraine Additional notes This LEGAL ALERT is issued to inform Baker & McKenzie clients and other interested parties of legal developments that may affect or otherwise be of interest to them. The comments above do not constitute legal or other advice and should not be regarded as a substitute for specific advice in individual cases.