Prince Alois has confirmed that Liechtenstein is taking steps to correct what has been regarded by much of the world as intentional loopholes in country’s banking system. The announcement did not come as much of a surprise. Despite earlier vows to do nothing in light of the scandal, Prime Minister Otmar Hasler (pictured left) had indicated that reforms had already begun.
No immediate details were provided but most tax professionals (including myself) suspect that the reform will include a provision for the country to provide tax information about foreign account holders. In order to protect the bank’s clients, there will likely be some concession from foreign governments to agree to lesser penalties in exchange for the information.
The changes which have been discussed over the past eight years, have been accelerated by world reaction to the tax evasion scandal which came to light earlier this year. Banking and financial services account for almost 1/3 of Liechtenstein’s gross domestic product.
Many banks and financial services companies have used the country’s banking secrecy laws to woo foreign clients seeking privacy. The spectre of change is controversial to those companies and Hasler realizes this. So, he has been progressing slowly, hoping to work both with the financial services companies and the heads of foreign countries like Darling and Merkel.
Prince Aloise was vague about the changes, saying:
In the future, we should offer all states comprehensive co-operation if they are willing to find sensible solutions with us for the client relationships we have built up, and if they are interested in fair and constructive co-operation for the future.
It will be interesting to see what happens moving forward. Clearly, Liechtenstein is facing pressure to be more transparent but some countries, like Switzerland, have traditionally not bowed much to the pressure. Politics or progress? We’ll see.
Sounds like the Prince is making a self-preservation statement. Probably has a hotel of lawyers in waiting to protect the crooks of the world who work as hard to avoid taxes as they do to conceal their attainment of those funds. Many a US citizen would be surprised what American citizens have accounts there. Or do they care? If the governor or treasurer of a US state was concealing funds in a Liechtenstein bank, they make be concern. But there are probably many wealthy folks who live in the US, benefit from the personal freedoms and benefits we have, and with this arrangement pay no US taxes.