No to tax havens in Europe: Andorra is introducing income tax for the first time

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andorra-is-bordered-by-fr-189_1The Andorran government is planning to submit a bill abandoning the long time advantage of having no personal income tax by the end of June 2013. The move was made under pressure from the EU in order to bring the Andorran tax system in line with international standards and to eliminate tax evasion inside the EU. Under the current tax system there is no income tax on individuals and companies. In addition, the EU finance ministers have started talks with Andorra to establish an exchange of information about holders of bank accounts. Andorra is not the only country which is discussing implementation of banking information exchanges. Among other countries which are being pressurised by the EU are Switzerland, Liechtenstein, Monaco, and San Marino. The EU is pursuing a wide exchange of information on all type of income within the EU. Some progress is already being made in the automatic exchange of information between tax offices located in EU, on employment and insurance income. The next step is an automatic exchange of information on dividend income and capital gains. The European commission is estimating a loss of tax revenue due to tax evasion to be in the region of €1tn each year. As all governments are struggling to find funds for social, government and military spending more attention is paid to tax collection.