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Liechtenstein ends banking secrecy, accepts OECD tax rules

Liechtenstein said on Thursday it would sign an international agreement on fighting tax evasion, sounding the death-knell for its long ingrained banking secrecy practices.

It said this refected its “commitment to tax cooperation based on widely supported international standards.”

The tiny Alpine principality said it would sign the Multilateral Convention on Mutual Administrative Assistance in Tax Matters “in November 2013”.

Liechtenstein also said it expected “automatic information exchange in tax matters (to) be the future international standard.”

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 20 members of the Group of Twenty (G20) of the world’s leading economies, 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 controls to track tax fraud.

Liechtenstein’s government said Thurday it was “prepared to conclude agreements on automatic exchange of tax information based on the future OECD standard” with countries that put in place structures that allow transparency.

The country said it was paying particular attention to the so-called G5 countries, Germany, Britain, France, Italy and Spain, and an automatic exchange pilot project they had launched.

“Liechtenstein supports the objectives of this initiative, in particular the establishment of a single and consistent global standard,” the government statement said.

“Only a truly global standard can guarantee a level playing field,” it stressed.