Monaco targets US tax evaders

Monaco, once on an international blacklist of tax havens, signs a deal to abide by international rules on exchanging information on US citizens.

WASHINGTON // The tiny city-state of Monaco, once on an international blacklist of tax havens, has signed a deal to abide by international rules on exchanging information about US citizens who may be evading taxes. The country of 35,000 inhabitants had been waiting to see if all international jurisdictions would co-operate before agreeing to sign Tax Information Exchange Agreements with the major countries that sought them, said Franck Biancheri, the Monaco government's councillor for external relations and international economic affairs. The US agreement commits Monaco's government to abide by Organisation for Economic Co-operation and Development (OECD) standards on tax issues in civil and criminal matters.

"It will have an impact of course," Mr Biancheri said before signing the deal. "Our policy will be to be sure that people investing money in banks [in Monaco] are residents. Tax advantages will still remain for people living in Monaco." About 40 banks including UBS, BNP Paribas and HSBC have units in the country, he said. The deal, which begins next year, covers all profits taxes in Monaco and all federal taxes in the US from this year onwards. Monaco does not have income tax.

Under the deal, the countries agreed to provide each other information, including bank account details, if they have reasonably tried and failed to get that information through other means. It also allows officials to enter each other's country to conduct interviews. But parties can decline to assist the other country in a request if disclosure "would be contrary to public policy". Industrialised countries have increased efforts to catch tax evaders as they struggle to lessen the effects of the global downturn.

Dozens of countries pledged this month at an OECD conference in Mexico City to step up efforts to clamp down on tax evasion, although few offered few concrete steps. Efforts by the OECD, a Paris-based organisation of the world's developed countries, have been criticised as ineffective as they generally lack enforcement authority. * Reuters