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UPDATE 2-Luxembourg, U.S. update tax treaty

Published 05/20/2009, 05:11 PM

* U.S., Luxembourg sign updated tax treaty

* US Treasury says part of broader effort at tax fairness (Adds key improvement, treaty details)

WASHINGTON, May 20 (Reuters) - The U.S. and Luxembourg signed an updated tax treaty on Wednesday, which the U.S. Treasury Department said will allow it to get more information to enforce U.S. tax laws in both criminal and civil matters.

The Group of 20 industrialized countries pledged last month to crack down on jurisdictions that fail to cooperate in cross- border tax evasion.

Before the treaty, the U.S. government did not have access to the names of U.S. citizens with Luxembourg bank accounts. The new treaty updates one from 1996 by adding language in accordance with standards set by the Organization for Economic Co-operation and Development.

Faced with the threat of being added to a black list of tax havens, Luxembourg was one of several countries that recently agreed to standards drawn up by the Paris-based OECD.

The Obama administration is proposing to raise billions of dollars by closing loopholes used by corporations and wealthy individuals related to offshore income and by tightening laws on financial institutions.

Treasury Secretary Timothy Geithner said in a statement the updated treaty is a "key part of enforcing the tax code fairly so that everyone pays their fair share."

Under the treaty, the United States will have access to information for all taxable years beginning with 2009. (Reporting by Kim Dixon; Editing by Tim Dobbyn and Andre Grenon)

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