San Marino's government on Tuesday accused Italy of imposing a virtual embargo and stalling on a treaty it needs to get off a tax haven blacklist, as the tiny state faces a mass outflow of funds due to Italy's tax amnesty.
The tiny, landlocked state has been under growing pressure over the past year as it battles the downturn and a global crackdown on offshore banking centres.
About 5 billion euros, or roughly a third of total deposits, have left San Marino's banking system because of an Italian scheme aimed at getting citizens to declare secret funds held abroad, San Marino Finance Minister Pasquale Valentini told reporters.
One by one, as I have long predicted, and as I noted of Andorra yesterday, the economics of the tax haven crackdown is beginning to close the world’s small secrecy jurisdictions down.
And that’s very good news for all honest people because secrecy jurisdictions are places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain. That regulation is designed to undermine the legislation or regulation of another jurisdiction. To facilitate its use secrecy jurisdictions also create a deliberate, legally backed veil of secrecy that ensures that those from outside the jurisdiction making use of its regulation cannot be identified to be doing so.