Following on from the success of the recent Liechtenstein Disclosure Facility, which has already resulted in HM Revenue & Customs recovering £363 million in unpaid tax and which is expected to bring in at least ten times that sum over the next five years, the two countries signed a full double taxation agreement (“DTA”) yesterday.

The DTA aims to remove obstacles to investment and cross-border economic activity, while also closing the net on tax avoidance schemes and to provide businesses with increased certainty over their tax treatment.

In a statement UK Exchequer secretary David Gauke said the government is “determined to clamp down on tax avoidance at home and abroad.

“The UK has the largest tax treaty network in the world,” he added. “Until now, Liechtenstein was the only country in the European Economic Area we had no agreement with. This new treaty and the existing disclosure facility show that the net is closing on those who try to evade their UK tax liabilities by using offshore structures – there are fewer and fewer places to hide.”

Those of us who work in the field of legal international tax planning will welcome this move as yet another step towards detoxifying the image of tax planning as a tool of avoiders and evaders. Used correctly international tax planning is beneficial to all parties. 

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Category: International Taxation

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