Monaco, U.S. sign tax cooperation deal
WASHINGTON, Sept 8 (Reuters) – The tiny city-state of Monaco, once on an international black list of the tax havens, signed a deal on Tuesday to abide by international norms in exchanging information about U.S. citizens who may be evading taxes by keeping money offshore.
The country of 35,000 inhabitants had been waiting to see if all international jurisdictions would cooperate before agreeing to sign Tax Information Exchange Agreements with the major countries that sought them, Monaco’s government councilor for external relations and international economic affairs, Franck Biancheri, said.
The U.S. agreement commits Monaco’s government to abide by Organization for Economic Co-operation and Development standards in bilateral negotiations with the United States involving tax issues in civil and criminal matters.
“It will have an impact of course,” on Monaco’s economy and banking sector, Biancheri told reporters prior to signing the deal.
“Our policy will be to be sure that people investing money in banks (in Monaco) are residents,” Biancheri said. “Tax advantages will still remain for people living in Monaco.”
About 40 banks, including UBS AG, BNP Paribas and HSBC have units in the country, he said.
The deal, which begins in 2010, covers all profits taxes in Monaco and all federal taxes in the U.S. from 2009 onward. Monaco does not have an income tax.
Under the deal, the countries agreed to provide each other information, including bank account data, if they have reasonably tried and failed to get that information through other means.
It also allows officials to enter one another’s country to conduct interviews.
Parties can, however, decline to assist the other country in a request if disclosure “would be contrary to public policy.”
Industrialized countries have ramped up efforts to catch tax dodgers as they struggle to contain the fall-out from the global recession. Dozens of countries pledged earlier this month at an OECD conference in Mexico City to step up efforts to crack down on tax evasion, though few offered few concrete steps.
Efforts by the OECD, a Paris-based organization of the world’s developed countries, have been criticized as ineffective as they in general lack enforcement authority.