On October 29, 2019 The Verkhovna Rada of Ukraine ratified an Agreement between the Government of Ukraineand the United States Government to improve compliance with tax rules and the application of the provisions of the US Foreign Accounts Tax Act (FATCA). The Law was signed by the President of Ukraine on November 4, 2019.

Specifically, ratification of the FATCA entails an obligation for Ukrainian banks and other financial institutions to provide the US tax office with information on the accounts of US citizens, US-based legal entities, and non-US entities with one or more controlling US entities. This information is provided in the context of account numbers, account turnovers and balances thereof.

However, it should be noted that the provisions of the Agreement have been somewhat transformed in order to bring them into line with the legislation of Ukraine. Thus, the Agreement provides for exemption of Ukrainian financial institutions from compulsory withholding tax of 30% from payments to account holders who do not meet the requirements of FATCA, as well as from the requirement to close accounts of such owners.

As a reminder, unlike the practice of determining tax resident status, implemented in most countries in which the taxpayer is required to pay taxes in the jurisdiction where he is a tax resident, US citizens are required to pay US taxes on income earned in any jurisdiction, regardless of resident status.