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Thursday, August 24, 2017

Azerbaijan signs agreement with U.S. to combat tax evasion by American citizens

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

The Azerbaijani Taxes Ministry announced the news earlier this month, saying the U.S. has the power to impose strict sanctions against financial institutions that refuse to take part in efforts to curb tax evasion by U.S. citizens, AzerNews reports.

Fifteen commercial banks have already joined the IRS in combating tax evasion: 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 U.S. income paid to non-U.S. financial institutions unless they enter into an agreement with the IRS and disclose information about their American accountholders, according to AzerNews.

The Cabinet of Ministers adopted a decision in April on the need to conclude such an agreement with the U.S., and a commission was established to achieve the goal.

Azerbaijan was added to the list of countries cooperating with the IRS last month, and the deadline for its financial institutions' registration in the U.S. tax authority's system was set for Dec. 31. After that, the two countries will sign an additional agreement on regulating the implementation of FATCA.