The OECD said today
that disclosures concerning alleged widespread tax evasion by German citizens
through the Alpine tax haven of Liechtenstein, highlight a much broader
challenge in today’s globalised economy: how to respond
to countries and territories that seek to profit from tax dodging by residents
of other jurisdictions.
|Vaduz Castle - Vaduz is the capital of the principality of Liechtenstein, situated by the Rhine |
“This is a
fundamental issue in our increasingly interdependent world,”
OECD Secretary-General Angel
OECD countries and a
number of co-operative financial centres have been working together for a number
of years to address the problems posed by anti-competitive tax practices, both
in OECD countries and offshore, by developing standards of transparency and
exchange of information in tax matters that balance the interests of financial
privacy with the need for countries to be able to enforce their own tax laws.
efforts, however, a few jurisdictions still
fall short of best-practice standards, effectively providing a basis for illegal
tax evasion on the part of some of their customers.
OECD published a list of un-cooperative tax havens, initially including seven
countries. Several have now made commitments to work with OECD and its partners
to improve transparency. But three remain on the list:
Andorra, Monaco and Liechtenstein.
“As long as there
are financial centres that refuse to co-operate in bilateral tax information
exchange and that fail to meet international transparency standards, residents
in other countries will continue to be tempted to continue to evade their tax
“The openness of
the global economy can only be sustained if participants assume mutual
responsibilities, as well as sharing benefits. Excessive bank secrecy rules and
a failure to exchange information on foreign tax evaders are relics of a
different time and have no role to play in the relations between democratic
societies,” he stated.
Liechtenstein's Crown Prince
Alois today slammed German authorities for their handling the investigation into
alleged tax evasion using funds channeled to the small Alpine principality.
``If media reports are to be believed,
German authorities paid a criminal to obtain stolen data,''
Alois said at a press conference. ``We reject this
The German government confirmed on Monday the
Federal Intelligence Service, or BND, received an ``unsolicited'' offer
by an informant and up to €5 million was paid for a DVD containing data on about
750 wealthy German nationals.
``Germany has clearly failed to
understand how one behaves towards a friendly state. We are a small country and
we want good relations with our neighbors, but we are also a sovereign state,''
the prince told the press conference in Vaduz.
``Germany won't solve the problems of
its tax system with this attack in Liechtenstein,''
Alois said. ``Germany would be better served to use the
money to improve its own tax laws rather than paying for information whose legal
background is questionable.''
Klaus Tschuetscher, Liechtenstein's justice
minister, also said today that the country's prosecutors have opened a probe to
investigate whether a person was instigated to breach the secrecy of business
data for the benefit of a foreign nation, a crime under the laws of
German Chancellor Angela
Merkel said on Monday that Liechtenstein should increase transparency in the tax
haven's banks and other financial institutions.
Merkel will meet with Liechtenstein's Prime
Minister Otmar Hasler in Berlin on Wednesday, said she will raise the matter of
how to regulate holdings in banks and foundations to build on previous measures
taken by the authorities.
``There are matters that in our opinion
still have to be addressed, and I will discuss those''
with Hasler, Merkel told reporters. Past steps ``give me courage we can
clarify the remaining issues,'' she said. ``It's
important that monies generated abroad are taxed properly in Germany.''