Azerbaijan is planning to sign a double taxation agreement (DTA) with the US for the avoidance of tax evasion.

Azerbaijan’s deputy minister of taxes, Sahib Alakbarov said that the the agreement will enable the ministry of taxes to fight against the Azerbaijani residents receiving income in the US and evading taxes.

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The agreement will allow Azerbaijan to put into force an earlier intergovernmental agreement (IGA) on Foreign Account Tax Compliance Act (FATCA) signed with the US Internal Revenue Service.

Additionally, a similar collection is planned to be deducted from revenues of the sale of securities and even transit payments starting from 2017.

As part of the DTA, the two countries will mutually exchange data about the accounts of their residents.

With effect from 1 July 2014, the FATCA law will require Azerbaijan financial institutions to report to the IRS information about financial accounts held by US taxpayers.

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As per the FATCA law, failure by an FFI to disclose information on their US clients, including account ownership, balances and amounts moving in and out of the accounts, will result in a requirement to withhold 30% tax on payments of US-sourced income.

Alakbarov said:"Until recently, the country’s legislation had prohibited the exchange of such data. But the Tax Code and some other legislative acts have already been amended to eliminate the ban imposed January 1, 2013. "

Azerbaijan has been included on the IRS list on May 16, and the deadline for its financial institutions’ registration in the system of US tax authority was extended until 31 December 2014.

Following the signing of IGA, Azerbaijan and the US will complete an additional document to regulate the practical organization of information exchange, ensuring privacy, and other issues.