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EU Steps Up Pressure To End Banking Secrecy

Friday, February 12, 2010

Determined to bring a swift end to the era of banking secrecy, the European (EU) Parliament in Strasburg has adopted a non-binding resolution that strives towards an automatic exchange of tax information.

Having deemed that the Organization for Economic Cooperation and Development’s (OECD) standards designed to combat tax evasion are “unsatisfactory”, the European Parliament has made clear its intention to step up pressure for an end to banking secrecy.

The non-binding resolution, 'responsible action in the area of taxation,' was adopted by a clear majority, and will now be forwarded to both the Council and the Commission.

According to the text, the EU will endeavour to actively encourage improvements to the existing OECD standards. It highlights the fact that the ultimate aim is to make the automatic and multilateral exchange of information a global standard.

According to the author of the report, Leonardo Domenici, the system of providing information exchange upon request contains too many loopholes.

Not only did the EU Parliament consider that the OECD’s framework for combating tax havens was unsatisfactory, but it also fiercely criticized the fact that “only” twelve agreements were necessary in order to remove countries from the OECD’s infamous “grey list” of countries deemed uncooperative in international tax matters.

Switzerland, Luxembourg and Austria were removed from the OECD’s grey list last year and were subsequently placed on the OECD’s much-coveted “white list” of countries that have fulfilled the OECD’s requirement to conclude twelve tax information agreements providing for administrative assistance in tax matters under Article 26 of the OECD Model Convention.

The OECD revealed its intention earlier this year to closely scrutinize implementation of the negotiated agreements.