Azerbaijan and the U.S. to sign double taxation avoidance agreement
The minister said that among other things, this document will allow the Ministry of Taxes to actively fight against the Azerbaijani residents receiving income in the U.S. and evading taxes.
In other words this agreement will enable to put into practice the agreement previously signed with the U.S. Internal Revenue Service, according to Alakbarov.
Azerbaijan and IRS reached an agreement on FATCA (Foreign Account Tax Compliance Act) - the sensational law on taxation of U.S. residents' foreign accounts. The document, adopted by the U.S. Congress in 2010, binds the banks all over the world to report to the IRS about such accounts from July 1.
FATCA imposes a 30 percent withholding tax on payments of U.S. source income made to non-U.S. financial institutions unless they enter into an agreement with the U.S. Internal Revenue Service and disclose information about their U.S. account holders.
A similar collection is planned to be deducted from revenues of the sale of securities and even transit payments starting from 2017.
Azerbaijan was included by the IRS in a list of cooperating countries. Therefore, a registration deadline of local financial institutions in the system of the U.S. tax body was extended until December 31, 2014. A final text of the intergovernmental agreement on FATCA, completion of all necessary internal procedures and the signing will be held by late 2014. ■