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Liechtenstein to end bank secrecy

Source: Thu, 14 Nov 2013 14:09 GMT
Author: Reuters
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A general view shows Vaduz Castle in Liechtenstein's capital Vaduz in this March 14, 2012 file photo REUTERS/Arnd Wiegmann
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LONDON, Nov 14 (Reuters) - Liechtenstein, whose banks have been accused by the United States and other countries of facilitating tax evasion, said on Thursday it would end its practice of helping foreigners hide money from their tax authorities.

The move highlights how Liechtenstein has moved more quickly than neighbouring Switzerland, possibly the world’s most important offshore financial centre, in reacting to international pressure for greater transparency.

Liechtenstein bankers hope the decision will temper recent negative publicity following U.S. and European investigations into the activities of the principality’s banks – attention which prompted wealthy foreigners to withdraw funds.

"We would like to position ourselves as an attractive business location," Katja Gey, director of the Liechtenstein Office for International Financial Affairs, said of the decision.

The government of the tiny country of 36,000 inhabitants said in a statement that it would sign up to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, an international forum that allows tax authorities to ask their counterparts in other countries for information on taxpayers.

The Alpine nation said it would also join up to a system of automatic information exchange being developed by the Organisation for Economic Co-operation and Development (OECD), which is expected to come into force in late 2015 or early 2016.

Under automatic information exchange, if an individual opens a bank account in a foreign country, that country will automatically inform the tax authority in the individual’s country of origin.

Tax advisers say the automatic exchange of information will make the most common forms of tax evasion difficult, if not impossible, in those countries that agree to it.

(Reporting by Tom Bergin; editing by Tom Pfeiffer)

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