The Alpine principality will start helping other nations claw back missing tax revenues.
Timing is everything these days, especially for a tax haven like Liechtenstein. A day before finance ministers of the Group of 20 were due to meet to discuss new guidelines to stop tax evasion, one of the world’s favored destinations for such shenanigans said it would start helping other nations claw back their missing tax revenues.
The tiny Alpine principality said Thursday that it was dropping its distinction between tax evasion and tax fraud, an issue that has frustrated tax authorities in the United States and Germany because Liechtenstein previously insisted on only handing over data in cases of outright tax fraud.
It now says it has already begun “concrete talks” with other nations and was offering bilateral tax agreements in cases of tax fraud and tax evasion. "We are aware of our responsibility as part of a globally integrated economic area,” Prime Minister Otmar Hasler said. “With today's declaration, we are making our contribution to a joint solution that will make an effective enforcement of foreign tax claims possible.”
International organizations such as the Organization for Economic Cooperation and Development have been lobbying for more transparency from tax havens like Liechtenstein, Switzerland and Luxembourg for many years now. But the crackdown has now reached a critical stage as governments around the world seek to tighten financial regulations to prevent another repeat of the credit crunch while desperately trying find new tax revenues.
France and Germany have already asked the OECD to prepare information on tax havens for the G-20 meeting in London on April 2. On Tuesday, France’s La Tribune reported that the OECD was adding Switzerland, Luxembourg, Austria, Singapore and Hong Kong to its list of noncooperative tax centers, which already included Liechtenstein.
Stephen Platt, chairman of the BakerPlatt Group and specialist in anti-money-laundering, said that Liechtenstein’s move was “essential” to its ongoing survival. "It is simply untenable within this climate and this environment for centers to continue not to criminalize the laundering of the proceeds of foreign tax evasion," he said, adding that in the long term such rules were “unsustainable and not good for your reputation.”
But the international backlash against tax havens by governments and the G-20 may also be too indiscriminate, he said, because of the “very real and distinguishing” differences between them. While Liechtenstein is only now amending its laws on tax evasion, other offshore financial centers like Jersey and Guernsey already did so a decade ago; Switzerland, the Cayman Islands and Singapore have not.
Meanwhile there is the other elephant in the room: banking secrecy. Liechtenstein seems keen to keep its rules in that area unchanged. "Our bank secrecy has always served to ensure the legitimate protection of the privacy of the citizen, which we will continue to retain,” Hasler said Thursday.
Platt believes that the G-20 nations are looking at tax evasion and banking secrecy as two related but distinctly important issues. “The criminalization of laundering of tax evasion is equally as important, [but] tax havens that do not address bank secrecy need to see it addressed,” he said.
Source:
Forbes
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