EU Presidency Welcomes Statements On Tax Cooperation

by Ulrika Lomas, Tax-News.com, Brussels

19 March 2009

The Czech Presidency of the European Union has welcomed recent pledges from several countries and offshore financial centres to toe the OECD line regarding fiscal policies and exchange of tax information.

"We believe that this step is of extraordinary importance for the cooperation between the tax authorities," the Presidency said in a statement issued on March 18. "At the same time it is an improvement of the administrative cooperation between the tax authorities in the EU internal market and in the foreseeable future [that] will allow us to reach the highest possible standard of cooperation and transparency in our relations with third countries."

The statement added that fighting tax evasion is one of the priorities of the Czech Presidency, which began in January 2009 and runs through to the end of June this year. "Therefore, we put emphasis on all initiatives which could help reach this objective. We believe that these countries will continue on the path they have started and we are prepared to support them further."

Liechtenstein, Switzerland, Andorra, Singapore and Hong Kong have all given commitments in recent days to make changes to their own laws that will effectively loosen banking secrecy provisions and allow certain information to be exchanged with other jurisdictions in cases where fiscal crime is alleged to have take place.

Singapore's Ministry of Finance announced on March 6 that it would introduce draft legislative amendments in the middle of 2009 that would enable the government to extend further cooperation on information exchange through its double tax agreements (DTAs) and allow it to negotiate and conclude further DTAs.

Hong Kong's Financial Secretary John Tsang announced in his budget speech in February that the territory would seek to both extend its double tax treaty network and put in place measures that would allow more information to be exchanged with treaty partners.

Meanwhile, Liechtenstein has committed itself to OECD standards on transparency and information exchange in tax matters and is currently engaged in talks with an unspecified number of other countries with a view to concluding new tax data exchange agreements.

The so-called 'Liechtenstein Declaration' was presented at an international press conference in Vaduz by Prince Alois of Liechtenstein, Prime Minister Otmar Hasler, and Prime Minister-in waiting Klaus Tschütscher.

"In future, we should offer all countries extensive cooperation that are interested in fair and constructive cooperation with Liechtenstein and are willing to find sensible solutions with us with respect to evolved client relationships," Prince Alois said.

As a small jurisdiction which has (unwittingly perhaps) made some large enemies in the form of Germany, the United States and other countries, Liechtenstein has less bargaining leverage than the Asian financial entrepots of Hong Kong and Singapore and has seemingly decided that these are the best steps to take to protect its financial centre.

"We are currently experiencing a fundamental and rapid change at the global level in the direction of stronger cross-border cooperation and international regulation," said Prince Alois. "With today's declaration, the Liechtenstein government is sending a signal that it is participating actively in the regulatory dialogue of financial centres without giving up Liechtenstein's identity or the advantages of a reliable and well-regulated small State. I am convinced that this will help us strengthen the trust of our clients in our financial centre."

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