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US deal sees Luxembourg scrap banking secrecy

Luxembourg is to scrap its historic banking secrecy laws after signing a tax deal with the US.

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Luxembourg is to scrap its historic banking secrecy laws after signing a tax deal with the US.

The agreement to exchange bank information on request with the US is the first time Luxembourg has signed such an accord with an OECD country.

The two countries have amended an existing bilateral tax treaty from 1996 to include the exchange of information standard of the OECD’s Model Tax Convention.   
 

OECD Secretary-General Angel Gurría hailed the move as a “major step forward in international efforts to counter tax evasion.”
 

“A fundamental transformation is underway in international tax cooperation practices," said Gurría, "I am particularly pleased that having recently withdrawn its reservation to the OECD standard on exchange of information Luxembourg has within a matter of weeks renegotiated its agreement with the United States to allow for the exchange of bank information on request in all tax matters."
 

Luxembourg has also reached a similar agreement with Bahrain and is renegotiating other bilateral tax treaties to include OECD standards.

US considering blacklist changes
The development comes as it has emerged the US is considering revising its tax legislation in relation to foreign nations to take account of the OECD’s so-called white list of countries which have substantially met its tax standard. The list includes the Isle of Man, Jersey and Guernsey.
 

The revision of the Multistate Tax Commission’s Model Statute, which is used to enact tax laws, would, if approved, replace a listing of tax havens drawn up in 2000, meaning OECD white-listed countries would no longer be at risk of blacklisting by the US.  
 

Guernsey Chief Minister Lyndon Trott, who has just returned from leading a delegation to the US, said: “This is precisely the change in policy that we have been advocating and developments like this are exactly the reason we made this trip,” adding, “I think it is fair to say that the US is looking upon Guernsey far more favourably than it once did.”
 

Trott has also invited to Guernsey a key figure driving the US’s Stop Tax Haven Abuse Bill. Robert Roach is chief investigator of the Senate Permanent Sub-Committee on Investigations and also tax counsel to Senator Carl Levin, lead sponsor of the tax haven bill.

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