Switzerland on Tuesday signed a revised double taxation agreement with Luxembourg, easing the restrictions on the exchange of tax information between the two countries.

It is the second of 12 such agreements Switzerland needs to sign in order to be removed from the “grey list” of tax havens established in April by the Organisation of Economic Co-operation and Development (OECD).

Priceless.

WASHINGTON — Many Americans know that China holds the most U.S. Treasury debt, followed by Japan. But who would expect a group of Caribbean countries would collectively come in fifth?

Or that Luxembourg would come in eighth?

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The Cercle has made an extremely important step towards a public debate on tax issues that is long overdue. The study has prompted a furious reaction from various quarterse including, for obvious reasons, Luxembourg’s finance industry, represented by the Luxembourg Bankers’ Association.

The bankers’ attacks, however, fail to address the main issues that the report identifies, but instead focuses on minor technical details — suggesting the study has correctly analysed the problem caused by Luxembourg. It is extremely important that this debate continue– and let us not forget that development NGOs have a moral responsibility to point to the negative effects of tax flight on development, under their mandates.

Read the full TJN blog post and link to the report here…

But there is an entirely separate side to this story that hasn’t permeated the coverage at all: the OECD standards are useless in any practical sense, and under these standards wealthy tax evaders will still feel perfectly safe stashing their money in Luxembourg.  As we discuss extensively on this website – the OECD’s standards require a tax haven to share a specific person’s bank account information with another country only if the requesting country can prove to Luxembourg that a certain person is evading taxes in the requesting country.  In short, as international tax law expert Jack Blum puts it, “If you have the information, we’ll give it to you.”  Of course, if you have the information, then you no longer need it, which is why we advocate a system of automatic exchange of tax information.

Of course, I then came across this story as I was flipping through news articles today on the Reuters website, which talks about how Switzerland may be coming off of the OECD’s grey-list in the near future.  The article concludes:

Switzerland is the world’s biggest offshore banking centre and the signing of the treaties is weakening its treasured bank secrecy. Austria and Luxembourg are both bank secrecy strongholds.

But again there’s no mention of what the OECD standards mean.  And, I suppose it is true that Switzerland’s banking secrecy is ever-so-slightly “weakened” by the treaties  (at least in a theoretical perspective), but in any pragmatic sense the treaties do nothing to assist foreign governments that are investigating tax evaders.  This is again why it’s so important for us to require automatic exchange of tax information.

Perhaps tomorrow I’ll wake up to read a story about the OECD grey-list which paints the whole picture.  Or perhaps I’m being overly optimistic.

But there is an entirely separate side to this story that hasn’t permeated the coverage at all: the OECD standards are useless in any practical sense, and under these standards wealthy tax evaders will still feel perfectly safe stashing their money in Luxembourg.  As we discuss extensively on this website – the OECD’s standards require a tax haven to share a specific person’s bank account information with another country only if the requesting country can prove to Luxembourg that a certain person is evading taxes in the requesting country.  In short, as international tax law expert Jack Blum puts it, “If you have the information, we’ll give it to you.”  Of course, if you have the information, then you no longer need it, which is why we advocate a system of automatic exchange of tax information.  (My friend, Nick Shaxson at TJN goes deeper into Luxembourg’s specific shortcomings in this post).

Nevertheless, there hasn’t been single mention of this caveat in any of the news coverage about Luxembourg’s TIEAs.  Indeed, save one Washington Post article, the mediocre coverage of the Luxembourg situation is sadly only emblematic of the news coverage surrounding TIEAs and the OECD’s grey-list in general.

It’s about time the news media cover both sides of this story rather than blindly buy into Luxembourg and other tax haven’s public relations campaigns.  This is a serious issue which costs developing countries in the hundreds of billions (if not trillions) of dollars each year – condemning many people to poverty – enables terrorist financing, and creates a shadow financial system which brought about the biggest financial crisis since the great depression.  It’s time we had serious coverage.

Luxembourg has revised its double tax convention with Norway to include provisions for the exchange of information in tax matters. The agreement brings the number of OECD model agreements it has concluded to twelve, ranking Luxembourg as a jurisdiction that has ’substantially implemented’ the internationally agreed standard in this area.

As a consequence, the Progress Report initially published by the OECD Secretariat on April 2, 2009, in conjunction with the G20 has been updated, to move Luxembourg into the category of ‘Jurisdictions that have substantially implemented the internationally agreed tax standard’.

Continue reading at Tax-News.com…

Luxembourg Minister of Budget Luc Frieden concluded a new tax agreement with Dutch State Secretary of Finance Jan Kees de Jager on 29 May. The agreement will provide for the exchange of information in tax matters between the two countries in accordance with the OECD standard.

A statement from Luxembourg’s Ministry of Finance said that the protocol, which amends the existing double tax convention of May 8,1968, provides for the exchange of information on request in individual cases between the tax administrations of both countries. It applies to tax years 2010 and following and has no retroactive effect. The agreement does not seek an automatic exchange of bank information and does not allow for general inquiries, or so called ‘fishing expeditions’.

Continue reading the article at Tax-News.com…

PARIS (Reuters) – Luxembourg signed a new tax cooperation agreement with France on Wednesday that reduces the scope of its banking secrecy, one of over a dozen such deals it intends to reach this year to avoid being branded a tax haven.

Luxembourg Budget Minister Luc Frieden said he hoped the Grand Duchy would have signed 15 double-taxation deals by the end of 2009 that meet OECD standards on information exchange.

Continue reading the article at Guardian.co.uk…

Un traité similaire entre Berne et Washington renforcerait la place helvétique

Le 20 mai, le Luxembourg a signé sa nouvelle convention de double imposition (CDI) avec les Etats-Unis. «Elle devrait constituer un précédent favorable pour la Suisse», selon Matt Spick, analyste bancaire de Deutsche Bank.

Continuez de lire à LeTemps.ch…