AMBASSADOR SEEKS UPDATE ON STATUS OF BILATERAL TAX

UNCLAS FLORENCE 000001

SIPDIS

SENSITIVE BUT UNCLASSIFIED
DEPARTMENT OF STATE FOR EUR/WE; EEB/IFD;
INFO: IO/USUN FOR AMB. WOLFF;
DEPARTMENT OF THE TREASURY TAX POLICY FOR JOHN HARRINGTON

E.O. 12958: N/A
TAGS: EFIN PGOV SM IT
SUBJECT: AMBASSADOR SEEKS UPDATE ON STATUS OF BILATERAL TAX
INFORMATION EXCHANGE AGREEMENT WITH REPUBLIC OF SAN MARINO


1. See Action Request in paragraph 5.




2. (SBU) Summary. During a bilateral discussion following his
presentation of credentials, Ambassador David Thorne pledged his
best efforts to meet the Republic of San Marino's request to
conclude a Tax Information Exchange Agreement (TIEA) with the
United States. Ambassador Thorne requests an update on status
of request made to Treasury in September and a timeline for
completing the agreement. End summary.




3. (U) On December 4, newly sworn-in Ambassador David H. Thorne
met with the Secretary of State for Foreign and Political
Affairs, Antonella Mularoni, in San Marino. They discussed San
Marino's recent steps to improve the transparency of its
financial sector, which have been judged positively by
international organizations such as the OECD, Moneyval, etc.
San Marino has made a request to officials in the Department of
State and Treasury to conclude a Tax Information Exchange
Agreement with the U.S. similar to the ones recently signed with
several countries, including many in Europe.




4. (SBU) San Marino leadership views a TIEA with the United
States as an essential element in its recent campaign to redeem
the reputation of its financial sector, and counter negative
media reports, especially from neighboring Italy, which continue
to depict San Marino as a haven for tax evasion. The present
Government, headed by Mularoni, has strengthened controls over
the banking system, has fulfilled the requirements to join the
OECD "White List" of countries that meet international financial
standards, and has exited the pool of countries under review by
the Financial Action Task Force (FATF) and International
Cooperation Review Group (ICRG)

working groups. It has signed agreements for the exchange of
financial information with a total of 14 countries, including
Italy, France, and Belgium, and it is close to signing similar
agreements with several more European countries, including
Denmark, the Netherlands, Germany, Portugal, Spain, and Norway.




5. (SBU) Comment and Action Request: Since its relations with
the U.S. were upgraded to Ambassadorial level three years ago,
San Marino has taken every opportunity to emphasize the
importance it attaches to this relationship. San Marino's
cooperation with the United States in many international
organizations (including support for U.S. candidates for
international offices) and in monitoring potential financial
transactions of terrorist organizations, continues to be
excellent. Notwithstanding the last several months of
uncertainty given the international financial crisis, the GRSM
has worked diligently with international organizations to make
its financial sector conform to international standards.
Consequently, we request that Department work with the Treasury
Department to complete the TIEA process with San Marino. The
signing of such an agreement not only bears witness to bilateral
solidarity, but would support the efforts of the San Marino
government to implement its anti money-laundering laws. At the
same time, it would provide a boost the government's efforts to
address difficulties brought about by the international
financial crisis, by strengthening its banking sector. End
Comment and Action Request.

COUNTRYMAN