Joining several other European countries, Latvia has embraced the FATCA Accord. In a significant step forward in the ongoing implementation of the Foreign Account Tax Compliance Act around the world, Latvia signed a FATCA Accord with the United States in August. Mark Pekala, the U.S. Ambassador to Latvia, and Andris Vilks, the Latvian Minister of Finance, signed an intergovernmental agreement to implement FATCA. The goal is to promote transparency between the two nations on tax matters. As specialists in international tax consulting, the international tax team at LSL CPAs believes it is essential to highlight this moment.
Latvia & The FATCA Accord
In light of the resistance of Russia and other former Eastern bloc countries to signing the FATCA accord with the United States, the Latvian decision is an important step forward. FATCA agreements underscore growing international cooperation to end tax evasion everywhere, facilitating mutual assistance in tax matters and the desire to improve international tax compliance.
At the same time, there has been territorial resistance from Russian financial institutions to the demands and reporting requirements that go hand-in-hand with the FATCA Accord. Such resistance seems to wane as the rest of the world falls in line with this new global standard to curtail offshore tax evasion.
The United States enacted FATCA in 2010 to combat offshore tax evasion. Beyond encouraging transparency, a vital goal of the legislation is to obtain information on foreign accounts held by U.S. taxpayers worldwide. Although the Swiss banks and even the Cayman Islands have come on board, many Eastern European countries saw the FATCA Accord as violating their financial and informational sovereignty.
Eastern Europe & FATCA Accord
The first Eastern European countries to embrace the FATCA accord were Hungary, Estonia, Czech Republic, Lithuania, and now Latvia. In light of these steps in the direction of cooperation, it is only a matter of time before Russia, Poland, Bulgaria, and the rest also come on board.
If you have foreign accounts in any of these former Eastern Bloc countries, don’t hesitate to contact the international tax team at LSL CPAs before it’s too late to protect your financial resources.
Pursuant to U.S. Treasury Department Regulations, any federal tax advice in this article is not intended or written to be used for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any tax-related matters addressed herein.
It is important to further note that this article presents only a partial view of the subject matter. It does not claim or attempt to be comprehensive or perfectly accurate. To learn more about how FATCA might apply to your foreign accounts, please call International Tax Consultant Yana Weaver at 714.569.1000.
