Tax fraud fight steps up in Lichtenstein, France
The global fight against tax evasion strengthened on Thursday with Lichtenstein agreeing to join international guidelines on discouraging tax cheats and France and the US agreeing cooperation.
The US government shutdown last month delayed France joining up to the US Foreign Account Tax Compliance Act (FATCA), a fraud fighting weapon aimed at blocking rich Americans from hiding taxable money abroad.
FATCA requires foreign financial institutions to report all assets in accounts held by US citizens to the Internal Revenue Service. French Finance Minister Pierre Moscovici and US ambassador Charles Rivkin signed the agreement in Paris on Thursday.
Approved by US Congress in 2010, FATCA enters full implementation in January, after facing stiff opposition in Switzerland, once a major destination for Americans looking to hide their fortunes from the tax man.
Under the policy, international banks are asked to report deposit information from clients subject to tax in the US or risk a 30 percent levy on revenue.
Ten countries have now signed the agreement, most taking the option to have banks and US authorities communicate directly with Japan and Switzerland choosing to work through governments.
The two officials said the deal was big step towards fighting tax fraud and fell in line with goals set out by the G20 group of nations at a summit in September.
At the St. Petersburg summit, leaders from the world's 20 biggest economies agreed to begin the automatic exchange of banking information by the end of 2015.
Liechtenstein meanwhile said it would sign the G20 agreement on fighting tax evasion, sounding the death-knell for its long ingrained banking secrecy practices.
The tiny Alpine principality said it would sign the Multilateral Convention on Mutual Administrative Assistance in Tax Matters "in November 2013".
The small, landlocked country, cushioned between Switzerland and Austria and long considered a tax haven, stressed its intent to "participate actively" with the Organisation for Economic Cooperation and Development in developing that standard.
At the instigation of many advanced countries, the Paris-based OECD has spearheaded a clampdown on tax evasion and the concealment of illicit funds.
The movement to scrap banking secrecy policies in Liechtenstein and other well-known "tax havens", such as neighbouring Switzerland, arose after the financial crisis of 2008 and subsequent eurozone debt crisis, as cash-strapped countries began going more aggressively after tax evaders and the banks that helped them.
By signing the convention, Liechtenstein will join a long list of signatories, including all G20 members, as well as more than 40 other countries.
In addition to exchanging information, signatories, which since last month also includes Switzerland, agree to organise simultaneous checks to track tax fraud.
© 2013 AFP