Posts Tagged ‘OECD tax haven black list’

Liechtenstein And The UK Enter Tax Info Sharing Agreement

Tuesday, August 11th, 2009

By: Ainsley Brown

It has been reported in the Times that ¨up to 5, 000 British investors have an estimated £3 billion stashed away in secret accounts in Liechtenstein.

It is a good thing then, well good from the perspective of HM Revenue & Customs (HMRC), that Liechtenstein and the UK Government have reached an agreement on the sharing of tax information.k1219680

This move by Liechtenstein was prompted by mounting international pressure, not the least of which was from the Organization for Economic Co-operation and Development (OECD) and G20. The OECD recently removed Liechtenstein, along with Andorra and Monaco from its uncooperative tax haven black list and placed it in the grey category. In being grey listed Liechtenstein has agreed in principle to international tax information sharing and disclosure standards and is making positive moves towards implementing them.  One such move is the signing of various Tax Information Exchange Agreements (TIEAs) with the UK and others.

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No More OECD Tax Black List?

Saturday, August 8th, 2009

By: Ainsley Brown

There are no more countries left on the Organization of Economic Cooperation and Development’s (OECD) Tax haven black list. Does this mean that the black list is no more?

No, not exactly.

The OECD has removed Andorra, Liechtenstein and Monaco from its black list of non-compliant tax havens. The three countries were the last remaining on the list leaving the list currently blank. However, this does not mean that the list no longer exists – far from it – it simply means that there are no countries currently on it. The OECD’s Committee on Fiscal Affairs could, if they found a country to be non-compliant, place it on the black list.

With their removal does this mean that Andorra, Liechtenstein and Monaco are now consider compliant by the OECD?

No, not exactly.

The three are now the grey list, meaning that they have made commitments to move towards internationally agreed tax standards. In order to reach the compliant designation, the three and for that matter any grey listed country, has to sign a number of Tax Information Exchange Agreements (TIEAs). All three have already signed such agreements or are in the process of doing so.

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The Swiss Banking Business Model Faces Realignment

Monday, June 29th, 2009

By: Ainsley Brown

The world economic down turn has had many knock on effects, many of which unexpected. It seems that bad times has the uncanny effect of making the once unthinkable, unsayable and undoable all very much possible.

The Swiss banking model can be best characterized with one word: Secrecy.

This don’t ask don’t tell attitude is more than just a business model – it is enshrined in Swiss law. The high protection that client confidentiality receives in Switzerland has made it a favorable destination for the money of my high net worth individuals wishing to shield their money.  Also it doesn’t hurt that it also has a very favorable tax policy as well.

This Swiss shield unfortunately is not very discriminating – it basically protects all comers. It makes no distinction between those who wish to shield their money for legitimate or illegitimate purposes. Moreover, it doesn’t even a make a distinction between rightfully and ill gotten gains. This hands off approach while very profitable has lead to some very tragic and embarrassing incidents for Switzerland.  Specifically, I am mainly speaking of Nazi accounts filled with plunder during their rise and fall but generally I am also referring to Swiss banks being the preferred destination for the money of certain criminal elements and many a dictator.

Please don’t get me wrong, I am not trying to say that the Swiss actively seek out ill gotten gains – to my knowledge they do not – nor am I saying that they have done nothing to try and rectify ill gotten gains ending up in their banks, I am not trying to say that at all. Then what am I trying to say?

What I am trying to say is simply this: any system predicated on secrecy will have its limits on how well it can tackle the twin issues of legitimacy and source of funds.

However, times they are a changing.

This change is evidenced by four things. The first is a long and as yet to be resolved battle between UBS and US authorities over the names and identities of some of the banks US clients and with it opposing interpretations of the US-Swiss Tax Treaty. The second is the OECD´s tax haven black list, talk of G20 nations developing a sanctions regime aimed at tax heavens and the drive by OECD countries and in particular the US to conclude double taxation agreements. The third is the revised US-Swiss double taxation treaty. And lastly is the current economic climate.

All of this has forced the Swiss into re-think mode. As reported in the Financial Times: leading members of the Swiss Private Bankers Association have recognized they may have to raise tax compliance with clients and, if necessary encourage them to declare previously hidden assets.

Does this mean an end to secrecy as the cornerstone of the Swiss banking model?

Highly unlikely. However, it does mean a few rays of light into the otherwise dark room of secrecy called the Swiss banking model.

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