Cyprus signed an intergovernmental agreement with the US for the implementation of the US Foreign Account Tax Compliance Act on Tuesday December 2, 2014 in what was described as a further step in boosting mutually beneficial economic and political ties.
The agreement was signed by Minister of Finance Harris Georgiades and US Ambassador to Cyprus John Koenig in a ceremony at the Finance Ministry.
The agreement provides for the automatic reporting and exchange of information in relation to financial accounts in Cyprus financial institutions held by US persons, and the reciprocal exchange of information regarding US financial accounts held by Cyprus residents in US financial institutions.
The agreement, which greatly enhances the profile of Cyprus as a transparent international business center, closely follows the Model I Agreement issued in November 2013 by the US Treasury. The signing of the US-Cyprus agreement introduces a Cyprus-specific Annex II, which defines the Cyprus-based entities that can be classified as Exempt Beneficial Owners, Deemed-Compliant Financial Institutions, and Exempt Products.
The agreement not only defines which entities are obliged to comply with FATCA rules, but also classifies which entities may be exempt or face lesser obligations should they not pose significant risk for US tax evasion.
The implementing legislation is expected to be enacted within the coming month.
The US government has thus far signed in excess of forty intergovernmental agreements, in what has been described as a model in the US administration’s effort to curtail tax evasion and boost transparency.
Addressing the ceremony, Mr. Georgiades emphasized that Cyprus is fully committed to effectively implementing all international standards on transparency and exchange of information for tax purposes.
