Liechtenstein eyes end of banking secrecy

14th November 2013, Comments 0 comments

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.

The tiny Alpine principality is set to sign the Multilateral Convention on Mutual Administrative Assistance in Tax Matters during a global forum on tax transparency in Jakarta on November 21.

The move reflects Liechtenstein's "commitment to tax cooperation based on widely supported international standards," the country's government said in a statement.

The Organization for Economic Cooperation and Development hailed the move.

"Liechtenstein has taken a very significant step today towards full transparency by endorsing the new standard on automatic exchanging of information," OECD chief Angel Gurria said in a statement.

Lichtenstein banks, whose secrecy practices long earned the country a reputation as a tax haven, also expressed enthusiasm.

"The Liechtenstein Bankers Association was closely involved in the elaboration of the government statement and fully supports it," head of the Liechtenstein Bankers Association Simon Tribelhorn said in a statement.

The small, landlocked country between Switzerland and Austria, long opposed the automatic exchange of banking data, citing the right to confidentiality.

On Thursday however, Vaduz acknowledged that "automatic information exchange in tax matters will be the future international standard."

And it stressed its intent to "participate actively" with the OECD 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.

Liechtenstein's government said Thursday 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.

Thursday's announcement will likely put more pressure on neighbouring Switzerland to clearly accept the automatic exchange of banking data.

Although the country has been inching in the direction of automatic information exchanges, Bern has listed a number of criteria that need to be met before doing so.

Switzerland is among other things demanding that there must be a single global standard in place before it joins in.

In the meantime, Bern is revising the Swiss law on administrative assistance in a bid to unblock hundreds of requests for information in connection with foreign tax probes.

© 2013 AFP

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