The tiny European countries of Liechtenstein and Andorra are two of the latest tax havens to succumb to pressure from international authorities to share information about assets hidden in bank accounts.
The international Organization for Economic Cooperation and Development praised the moves by various financial centers in recent weeks in favor of transparency and exchange of information on tax matters. Tax havens are expected to be one of the major topics of discussion at the Group of 20 world leaders’ summit in London in April.
“Ending the abuse of banking secrecy arrangements that facilitate tax evasion is part of a broader drive to clean up one of the more controversial sides of a globalized economy,” said OECD Secretary-General Angel Gurria (pictured) in a statement. “The support of the G-20 for efforts to improve transparency and exchange of information has underscored their relevance for both developed and developing countries.”
Pressure has been intensifying on countries that allow secret bank accounts as the world economic crisis forces more nations to look for extra tax revenue without raising taxes. Liechtenstein came under scrutiny after a CD-ROM surfaced last year listing the names of thousands of accounts at the principality’s LGT bank (see Tax Haven Legislation Gaining Momentum). The principality signed an agreement with U.S. authorities last December and issued a declaration Thursday that it would begin complying with the OECD’s standards.
“Through this declaration, Liechtenstein commits to, and will implement, global standards of transparency and exchange of information as developed by the OECD and will advance its participation in international efforts in order to counteract non-compliance with foreign tax laws,” said the declaration.
Andorra also announced its willingness to enter into tax information exchange agreements and its intention to eliminate strict bank secrecy for tax purposes by November 2009.
Other recent converts include Singapore, the Isle of Man, the Cayman Islands and Hong Kong. Switzerland has also been coming under pressure from the Internal Revenue Service, which recently signed a $780 million deferred-prosecution agreement with UBS. The Swiss bank is still holding out on releasing the identities of approximately 47,000 U.S. customers, claiming that would violate Swiss banking secrecy laws, but the Swiss government is reportedly working on a review of its secrecy rules.
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