• Wed
  • Sep 24, 2014
  • Updated: 1:28am
BusinessEconomy
DIPLOMACY

Tax haven Liechtenstein opens consulate in Hong Kong to boost ties

European tax haven wants to boost its presence in Asia as region's economic power grows

PUBLISHED : Monday, 01 July, 2013, 12:00am
UPDATED : Monday, 01 July, 2013, 2:21am

The Principality of Liechtenstein opened a consular office in Hong Kong last week as it seeks to boost business ties with the city and the mainland.

The European state owes much of its wealth and status as an international financial centre to its long history as a tax haven. Net inflows of new money into Liechtenstein last year totalled 13.2 billion Swiss francs (HK$108 billion), according to an official Liechtenstein website. The nation's banks managed client assets worth 184 billion francs at the end of 2012.

"The opening of the Liechtenstein Honorary Consulate in Hong Kong is a very special event for Liechtenstein. In the past there was no representation in Asia," said Liechtenstein foreign minister Aurelia Frick. The state also opened an honorary consulate in Singapore last week.

"The development of a number of Asian economies including Hong Kong and China has been impressive during the last decades, and the region is becoming more important for Liechtenstein. The Liechtenstein government has therefore decided to strengthen the presence of Liechtenstein in the region," said Frick.

"The Hong Kong Consulate will enhance both economic and cultural co-operation between Hong Kong, China, and Liechtenstein. Hong Kong and Chinese clients are of great importance to the Liechtenstein Financial Centre, and their significance is underscored by various agreements between Liechtenstein and Hong Kong, such as a double taxation agreement reached in 2010."

The two biggest Liechtenstein banks, LGT Bank and VPBank, have operations in Asia, Frick noted. LGT has offices in Singapore and Hong Kong and employs 250 people. The firms focus on private banking and asset management. VPBank has a subsidiary in Singapore.

In 2008, Berlin investigated German tax dodgers who allegedly channelled funds into LGT and other Liechtenstein banks to evade tax. LGT Bank, owned by the Liechtenstein royal family, lost many clients in 2008 and 2008 following the naming of the firm in a US senate report on tax evasion, according to Global Banking News.

In May, European Union (EU) finance ministers mandated the European Commission to negotiate with Liechtenstein, Switzerland, San Marino, Andorra and Monaco to expand the amount of tax information the European tax havens must share with the EU. In April, the US justice department sought help from the Liechtenstein Tax Authority in gathering data on US taxpayers who used the country to evade taxes, The Wall Street Journal reported.

"The current developments towards further transparency and enhanced co-operation in tax matters are closely observed by us," said Frick. "We have a clear strategy for negotiations with the US and EU. For us it is important to be a reliable partner."

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