Holy See and US sign historic accord against tax evasion

Archbishop Paul Gallagher

The Holy See and the US have signed a first-ever inter-governmental economic accord aimed at fighting tax evasion. Vatican Secretary for Relations with States, Archbishop Paul Gallagher - acting also on behalf of the Vatican City State - and the US Ambassador to the Holy See, Kenneth Hackett, signed the agreement in the Vatican yesterday.

This agreement - which is the first formal inter-governmental agreement between the Holy See and the United States - underscores the commitment of both parties to promote and ensure ethical behavior in the financial and economic fields. In particular, this agreement will prevent tax evasion and facilitate the compliance of fiscal duties by those US Citizens who conduct financial activities in Vatican City State.

Ensuring the payment of taxes and preventing tax evasion are of crucial economic importance for every community since adequate tax revenues and public spending are indispensable for governments to become instruments of development and solidarity, to encourage employment growth, to sustain business and charitable activities, and to provide systems of social insurance and assistance designed to protect the weakest members of society.

In a context of economic globalization, it is therefore essential to strengthen the exchange of information with the view to prevent tax evasion. The present agreement is thus based on the most up-to-date global standards to curtail offshore tax evasion through the automatic exchange of tax information.

Speaking to Vatican Radio, Ambassador Hackett expressed his satisfaction with the accord, saying it also puts a certain stamp of approval on the Holy See's efforts over recent years to improve the transparency and accountability of its financial apparatus.

"Certainly we are pleased with the steps that the Vatican has taken to improve issues of transparency and oversight and accountability. This new agreement that is being signed today is a step in the process. And it is a seal of approval - I think for any financial transaction, it's a process that you've got to stay with and you can't let down your accountability system. So we're very happy and pleased that they have taken this step."

Wednesday's accord builds on cooperation between the Holy See's Financial Intelligence Authority (AIF) and Vatican City State with US agencies. The AIF has signed interagency agreements for information exchange with the Financial Crimes Enforcement Network and the US Office of the Comptroller of the Currency.

In May 2013, the AIF signed a Memorandum of Understanding with the Financial Crimes Enforcement Network of the US Treasury Department in Washington, D.C.

In July 2014, the AIF signed an agreement to share information with the US Office of the Comptroller of the Currency.

Source: VIS/Vatican Radio