The Paris-based Organisation for International Cooperation and Development (OECD) today welcomed the announcement of a package of measures between Liechtenstein and the United Kingdom intended to ensure effective exchange of information for tax purposes between the two countries and to address the important issue of undeclared funds in a cooperative way.
A release from the OECD says the measures include a tax information exchange agreement (TIEA), which allows for exchange of information, such as bank information, to OECD standards. This is the second such agreement entered into by Liechtenstein as it already has an agreement with the United States. Moreover, negotiations are continuing for agreements with a number of other countries.
Importantly, the measures also include the introduction by Liechtenstein of a five year taxpayer assistance and compliance program as well as the introduction by the United Kingdom Revenue of a five year special disclosure facility for persons wishing to regularize their UK tax affairs. At the end of the five year period it is the intention of both parties that there will be no United Kingdom taxpayers using the laws of Liechtenstein to disguise their liability to United Kingdom tax and the TIEA will become fully operational.
Commenting on the new measures Jeffrey Owens, Director of the OECD’s Centre for Tax Policy and Administration said, *“The announcement shows that the era of bank secrecy as a shield for tax evaders is coming to an end. This confirms Liechtenstein’s willingness to position itself as a legitimate financial center which is prepared to compete on the basis of the services that it provides.*
*”It also shows that OECD countries are increasingly recognizing the benefits in this changing environment of voluntary compliance strategies that encourage taxpayers to come forward and voluntary declare income and assets held offshore which have not been disclosed to their home tax authorities.”*
Dr. Owens also said that that he is particularly pleased about the innovative and co-operative design of this joint UK-Liechtenstein initiative which, he said, *“may well serve as a model for other countries.”*