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Tuesday, August 22, 2017

U.S., Azerbaijan to sign tax evasion agreement

The U.S. and Azerbaijan are set to sign a double tax evasion agreement in the near future, according to Azerbaijan's Deputy Tax Minister Sahib Alekperov.

"The agreement will allow Azerbaijan's Taxes Ministry to actively combat those citizens receiving income in the U.S. but evade taxes," Alekperov said, according to AzerNews. "In other words, this agreement will enable Azerbaijan to put into practice an earlier agreement signed with the U.S. Internal Revenue Service (IRS)."

The earlier intergovernmental agreement was the Foreign Account Tax Compliance Act (FATCA), which imposes a 30 percent withholding tax on U.S. income paid to non-U.S. financial institutions unless they enter an agreement with the IRS and disclose information about their US account holders.

The same type of withholding tax will be applied to revenues from the sale of securities and transit payments starting in 2017.

"Until recently, the country's legislation had prohibited the exchange of such data," Alekperov said, AzerNews reports. "But the Tax Code and some other legislative acts have already been amended to eliminate the ban imposed January 1, 2013. An agreement on the avoidance of double taxation must be concluded with the U.S. to pave the way for data exchange between the two countries."

Azerbaijan was included on the IRS' list of cooperating countries on May 16, and its financial institutions have until Dec. 31 to register in the tax authority's system.