EUbusiness.com writes - The European Commission will recommend tightening EU rules against tax dodgers who stash their cash in an offshore bank account, a senior official said.In March,  after tax evasion allegations and controvesy between Liechtenstein and Germany erupted, the EU’s finance ministers requested that the commission review the 2005 tax directive.

An interim report, set to be presented on May 14, “very clearly points in the direction of a revision,” the commission’s director general for taxation, Robert Verrue, told AFP on Tuesday.

“He said that the report aimed ‘to alert ministers to the current directive’s weak points’ in the wake of recent revelations of alleged tax fraud by rich Germans hiding their cash away in Liechtenstein.”

The savings tax directive , in it’s present form, already requires EU member states to share tax information with one other on interest income kept by account holders from other EU countries.

However, special arrangements have been made for Austria, Belgium and Luxembourg to protect their jealously guarded banking secrecy.

“The EU has similar bilateral agreements with a clutch of countries and territories known for their banking secrecy laws, including Switzerland and Liechtenstein.”

“However, the savings directive allows considerable scope for people to set up foundations in order to get around the rules, which also do not cover such revenues as dividend income or capital gains.”

“The directive also does not cover fast-growing Asian offshore banking centres such as Hong Kong, Macau and Singapore, with which the EU is struggling to negotiate similar information-sharing accords.”

EU members are obviously deeply divided on the issue of banking secrecy. In light of this, the commission has said it, “will try to find out on what points there are nevertheless a majority” in agreement, before making proposals.