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Heat rises for tax havens as G20 summit looms

PARIS (Reuters) - Switzerland, Austria, Luxembourg and many offshore finance centers could face intensified pressure to reduce bank secrecy and shake the tax haven label as G20 leaders seek to reform the global financial system.

The Organization for Economic Co-operation and Development has supplied governments with a long list of places where bank secrecy rules are deemed undesirable, and those three countries plus others feature prominently in OECD records.

“We’ve made information available to the G20,” a spokesman for the Paris-based Organization for Economic Co-operation and Development said on Wednesday. “It’s up to the G20 to decide what to do with it now.”

He declined to name names but said most were well known and more or less public knowledge.

Leaders from the G20 group of old and new economic powers meet in London on April 2, seeking a collective response that could restore confidence in a shattered global financial system.

But they appear to be struggling to find issues where they can show they are no longer just rehashing previous pledges.

G20 finance ministers and central bankers meet near London on Friday and Saturday to prepare for the summit, just days after U.S. calls for more fiscal stimulus from other governments exposed a rift with mainland Europe, which says it is going as far as it can on anti-recession spending for now.

While relatively minor alongside attempts to fend off the world’s worst economic downturn in decades, many if not all G20 leaders could see uncooperative tax havens as an area where they could put on a show of collective action with the announcement of a crackdown at the London summit.

Though the OECD spokesman declined to give names, much of the details are in published reports on tax havens, notably by the OECD, which spearheaded a blacklisting campaign that once envisioned sanctions but was abandoned in 2005.

As pressure mounts for results from the G20 summit, reviving those efforts is an option, though it remains to be seen whether the G20 would publish a blacklist and couple it with a threat of specific sanctions.

One OECD recommendation is the imposition of a withholding tax on transactions with any financial centers deemed not to be open enough.

Assets of anything from $1.7 trillion to more than $11 trillion may be stored in tax havens, according to various estimates cited by the OECD.

In addition to Switzerland, Austria and Luxembourg, a 2008 report by the OECD also named Liechtenstein, Panama, Singapore and others as places where openness was sub-standard. It said many others had promised to rectify things but had yet to do so.

France and Germany, two G20 members, last week proposed new steps against non-cooperative tax centers and called for a revised set of criteria to draw up the new list.

One proposal was to make financial institutions spell out in their annual reports if they worked with non-cooperative financial centers. Another was to make supervisory authorities take this extra risk into account in the capital requirements for these institutions.

The U.S. tax authorities are trying to get data on tens of thousands of Americans with secret bank accounts in Switzerland, deemed to be the world’s biggest offshore financial center.

Additional reporting by Anna Willard; Editing by Ruth Pitchford