On 22 April 22 the Cabinet of Ministers of the Ukraine approved the text of a draft "Intergovernmental Agreement" with the Americans concerning their Foreign Account Tax Compliance Act 2010, thereby authorising the minister of finance to sign on the Ukraine's behalf.

Under the IGA, Ukrainian financial institutions are to report targeted information about US accounts they maintain to the Ministry of Finance of Ukraine, which is to pass such information on to the US Internal Revenue Service automatically.

At least 117 Ukrainian banks and financial institutions have already registered voluntarily with the IRS with a view to qualifying as "co-operating financial institutions" and have introduced the FATCA related requirements into their internal procedures.  The signing of the IGA is supposed to lead to Ukrainian legislation that is expected to remove all concerns as regards the compliance that the Ukrainian banks might have.

FATCA was enacted in 2010 by the US Congress to target non-compliance by U.S. taxpayers using foreign accounts. It requires foreign financial institutions to report to the IRS information about financial accounts held by US taxpayers, or by foreign entities in which US taxpayers hold a substantial interest. The Ukraine originally promised to sign on 26th June last year.

* Ihor Olekhov can be reached on +380 44 590 0101.