American Tax Authority Extends Reach to Estonia
OREANDA-NEWS. April 16, 2014. US Ambassador Jeffrey Levine and a Finance Ministry official have signed an agreement on exchange of information as part of the implementation of the US Foreign Account Tax Compliance Act (FATCA).
The aim of the intergovernmental agreement signed Friday is to make tax avoidance by Estonian and US tax residents more difficult and give financial institutions more market certainty, said the ministry in a statement.
With several FATCA deadlines looming this spring, the US is entering into the bulk of the bilateral agreements under which tax authorities agree to exchange information once a year on US taxpayers' accounts with financial institutions in other jurisdictions.
The increased scrutiny stems from the fact that unlike in many countries, all US citizens have reporting requirements to the US Internal Revenue Service, regardless of their actual residence.
Financial institutions in countries that have signed the agreement are considered compliant, while banks in non-signatory countries could face measures such as 30 percent withholding on payments of US origin.
The agreement now goes to Parliament for ratification.
In Estonia, mainly the Tax and Customs Board will be responsible for exchange of information, stemming from the agreement on avoidance of double taxation signed in 1998.
All European Union member states are expected to sign on.
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