Luxembourg's Finance Minister Luc Frieden has recently underlined the need to adapt the country's financial sector to international developments, and to strengthen and improve the financial centre to ensure that it remains "credible and competitive at global level".
The Luxembourg Government plans to initiate discussions with the US regarding implementation of the Foreign Account Tax Compliance Act (FATCA), by the third quarter of the year at the very latest, Frieden explained. It is clear that Luxembourg will have to redefine the principle of banking confidentiality, Frieden continued. He pointed out that, although it is essential to maintain confidentiality and to protect client information, it is also essential to guarantee an efficient cooperation with other tax administrations vis-à-vis the exchange of information in the fight against tax evasion.
Frieden explained that Luxembourg’s position has always been to encourage a wider debate on the different means with which to combat tax evasion. He noted that although an automatic exchange of information was championed, and a withholding tax system recognised in 2003, since then the world has changed significantly and trends have evolved in different directions.
Although Luxembourg must naturally adapt to international developments in terms of regulation and tax compliance, the financial centre must also become more competitive, Finance Minister Frieden explained. He highlighted the fact that the financial centre is accepted as the engine of the country’s economy and that a third of gross domestic product and fiscal revenues flow from the financial sector.
Frieden alluded to the need to conserve or to adapt other traditional strengths, namely rapid decision-making, the favourable climate for business development, and the implementation of international legislation. In each banking establishment, excellence and sustainable growth must become key concepts for developing high-quality products and services to enable Luxembourg to stand out from other financial centres, Frieden stated. He also noted that efforts must be made by both the public sector, in terms of economic management and promotion, and the private sector, in terms of excellence. He said maintaining these standards will lead to the future success of the financial centre.
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