* Under amnesty plan dodgers would repay taxes, small fine
* Italy has long battled tax evasion
By Giuseppe Fonte
ROME, Jan 23 Italian Prime Minister Enrico Letta's cabinet will discuss on Friday plans to offer a partial amnesty to tax evaders who stashed assets outside the country, two government sources said.
The legislation would not go as far as previous amnesties but would entail the state dropping most criminal charges if tax dodgers voluntarily declare their hidden assets and pay back the taxes owed plus a small fine, the sources said on Thursday.
However, they would still be liable for prosecution for more serious financial crimes.
Italy has long suffered rampant tax evasion and successive governments have pledged crackdowns with the aim of reducing the fiscal burden on honest Italians and relieving the strain on public finances amid the country's longest postwar recession.
The amnesty would probably remain in place until 2015, the sources said, so would anticipate an agreement Italy is still negotiating with Switzerland to allow full disclosure of Italian holdings in Swiss banks, which could come into effect in 2016.
If the two countries reach an agreement and Switzerland opens up its bank data bases to Italy's tax authorities, Italians would probably no longer be able to invoke the amnesty, the sources said.
In 2013, the finance police discovered more than 8,000 Italian businesses that had declared no income whatsoever, hiding an estimated 16 billion euros in taxable revenue, according to annual figures published on Thursday.
The finance police also discovered more than 15 billion euros in revenue and assets hidden outside the country in 2013, mostly in tax havens, the figures showed.
Former prime minister Silvio Berlusconi introduced a series of "tax shields" - the latest in 2009 and 2010 - which were sharply criticised for being too lenient and for failing to discourage future tax avoidance.
The "tax shields" allowed Italians to bring money back from foreign tax havens anonymously and without criminal prosecution if they paid a relatively small fine, starting at about 5 percent of the total repatriated assets, much lower than the 40-plus percent in income tax levied on high earners. (Additional reporting and writing by Steve Scherer; Editing by Gareth Jones)