Tolerance of evasion is running low, but there are still places left to hide

August 14th, 2009

Financial Times

What’s so significant about the Liechtenstein deal?

Liechtenstein, once one of the world’s most secretive tax havens, is going further than almost any other centre in cleaning up its act. The deal is a dramatic example of a jurisdiction giving up banking secrecy in return for recognition as a legitimate financial centre. It is helping flush out tax evaders by making its banks close non- compliant accounts by 2015.

Why have Liechtenstein and other bastions of secrecy crumbled like this?

Liechtenstein found itself exposed after the theft of data by a former employee led to an evasion scandal last year. But every tax haven is feeling the heat. The big industrialised countries have threatened sanctions if tax havens do not give up banking secrecy. Tolerance for evasion is running low because of the poor state of most countries’ public finances and the election of Barrack Obama gave new momentum to the campaign against tax havens. The dispute between the US and UBS, the Swiss bank, over possible evasion by 52,000 US clients has added fuel to the flames.

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