After Parliamentary Elections in Azerbaijan President Approves FATCA Agreement

President Ilham Aliyev on October 2 approved by a decree the agreement between the governments of Azerbaijan and the United States on "Improving compliance with Azerbaijan and the United States of international rules on tax requirements and fulfilling the requirements of the Foreign Account Tax Compliance Act, FATCA)." The act was passed by the US Congress March 18, 2000 and entered into force on 1 January 2013.

The agreement was signed on September 9, 2015 and ratified by the Parliament on 20 October. It defines the criteria by which accounts of individuals and entities are subject to inspection under the FATCA. Authorized bodies responsible for control over the implementation of the agreement are the Ministry of Taxes of Azerbaijan and the US Treasury Department.

FATCA provides counter tax evasion by US citizens earning financial assets in other countries. The law requires foreign banks and financial institutions should disclose to the IRS information on the accounts of American clients as physical and legal entities. Since 2017 the agreement will cover the fee from the proceeds of the sale of securities and transit fees.

The Azerbaijani variation of the agreement, which falls into the category Model A1, banks and financial institutions are obliged to inform the IRS through the Azerbaijani government.

Under the agreement, the United States also has an obligation to inform the government with respect to the Azerbaijani residents in its territory.

Azerbaijan became a partner of the US FATCA on May 16, 2014 and by the time the agreement came into force all the banks and financial institutions joined the IRS. Official Baku decided to undertake such cooperation under the threat of sanctions. The Cabinet of Ministers on April 22, 2014 issued a special order №103s, appointing the Ministry of Taxes as a commissioner for the exchange of tax information. After this the period of registration of banks and financial institutions of Azerbaijan on the US Ministry of Taxes portal was extended from 5 May until 31 December 2014, fatca.ru reported. -0-