Russian Banks Could Face 30 Percent Tax in US if Turmoil Continues

The United States is planning to use an anti-tax-evasion law to punish Russia for its actions in Ukraine, a tactic that could prove to be more costly than sanctions.

The law was passed in 2010, long before the crisis in Ukraine. But it could become a powerful economic weapon.

The United States is planning to use an anti-tax-evasion law to punish Russia for its actions in Ukraine, a tactic that could prove to be more costly than sanctions.

The law was passed in 2010, long before the crisis in Ukraine. But it could become a powerful economic weapon.
Read MoreUS urges Russia to end support for separatists

Beginning in July, federal law requires U.S. banks to start withholding a 30 percent tax on certain payments to financial institutions in other countries unless those foreign banks have agreements in place to share information about U.S. account holders with the Internal Revenue Service. The withholding applies mainly to investment income.

Russia and dozens of other countries have been negotiating information-sharing agreements with the U.S. in an effort to spare their banks from such harsh penalties.

But after Russia annexed Crimea and was seen as stoking separatist movements in eastern Ukraine, the Treasury Department quietly suspended negotiations in March. With the July 1 deadline approaching, Russian banks are now concerned that the price of investing in the United States is about to go up.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza