Tax havens make concessions as pressure mounts

By Lisa Jucca

ZURICH (Reuters) - Blacklisted tax havens Andorra and Liechtenstein relaxed their strict bank secrecy rules on Thursday in the face of a global crackdown that looks set to force top offshore center Switzerland to open up soon.

The moves come as finance ministers from the G20 group of developed and emerging countries prepare to meet in Britain from Friday ahead of a summit in London on April 2 that is expected to seek ways to fight offshore tax evasion.

Other offshore centers, whose banking industries have thrived under privacy laws that have attracted foreign wealth, have also made concessions in recent weeks, as the financial crisis prompts cash-strapped Western governments to be more aggressive against tax evaders.

The tiny Alpine principality of Liechtenstein said on Thursday it would comply with international tax and data sharing standards set up by the Organization for Economic Cooperation and Development (OECD), bypassing neighboring Switzerland in the quest for greater tax transparency.

"I'm quite sure Switzerland will take similar steps in the near future," Crown Prince Alois von und zu Liechtenstein said.

Andorra, a bank secrecy stronghold nestled between France and Spain, also said on Thursday that it was planning to relax bank secrecy in order to be removed from an OECD blacklist. It planned to pass a law to this end by November.

The OECD praised recent moves by Singapore, Hong Kong, Andorra, Isle of Man, Liechtenstein and the Cayman Islands.

"Moves by a number of financial centers over recent weeks have given a welcome boost to efforts to promote transparency and exchange of information on tax matters," OECD Secretary General Angel Gurria said in a statement.

The OECD list includes Liechtenstein, Andorra and Monaco, but France and Germany want others, including Switzerland, to be added. German Chancellor Angela Merkel said on Thursday she was optimistic that tax havens would co-operate if the G20 threatened to blacklist them.

Monaco declined to comment on its plans on tax.

PRESSURE MOUNTS ON SWITZERLAND

Switzerland, the world's biggest offshore banking center with estimated assets under management of $2 trillion out of a total of $7 trillion, is under pressure from a U.S. tax fraud targeting its No. 1 bank UBS.

Swiss Justice Minister Eveline Widmer-Schlumpf told Swiss television on Thursday the government was working on a review of bank secrecy rules and expected to present its ideas "shortly."

The government has asked a committee of experts to come forward with proposals on more tax cooperation in view of the G20 meeting and will discuss the topic at a meeting on Friday.

Walter Wittmann, an economic professor at the University of Freiburg, was quoted by newspaper Blick am Abend as saying that Switzerland would be "guaranteed a place on the blacklist" if it refused to cooperate.