The German government says it has no grounds to pursue sanctions against Germans who carry out bank transactions with states it had previously accused of being tax havens.

Last year, the finance ministry, then run by Social Democrat Peer Steinbrueck, shepherded legislation through parliament that allows the government to take measures against German residents transferring money to countries notorious for low taxation.

Under the law, German companies or individuals interacting with such countries would be forced to document the transactions for German tax offices. Lack of compliance would result in Germany revoking companies' privileges and imposing fines on individuals.

A statement from the finance ministry, however, now run by Christian Democrat Wolfgang Schaeuble, said that "no state or area fulfilled the criteria for prohibitive measures suggested in the September tax evasion law. At this point, we see no reason to force taxpayers or banks to provide documentation of accounts."

Michael Offer, spokesman for the finance ministry, called the findings a "positive sign."

"It's clear that those states that had previously been suspected of enabling tax evasion have reacted to international pressure to fulfill the standards outlined in the new law," he said.

End to fight against tax havens?

Germany's new stance on tax havens follows the Organization for Economic Cooperation and Development's (OECD) removal of all countries - including Belgium, Luxemburg and Switzerland - from its "gray list" of uncooperative tax havens.

The OECD said the nations had made sufficient commitments to implement OECD standards of "transparency and the exchange of information."

Still, Joachim Poss, deputy leader of the Social Democrats - Germany's largest opposition party - told the daily Tageszeitung that the finance ministry's findings were inappropriate.

"This is comparable to simply scrapping the law passed in September. The new finance ministry, the new government, is simply fulfilling the wishes of the economy, which massively financed its political campaign," he said.

Green party economic expert Gerhard Schick said Finance Minister Wolfgang Schaeuble was "effectively ending the fight against tax evasion in Germany."

Schaeuble, meanwhile, in an interview with the German branch of the AP news agency, called on the OECD to enforce the standards of transparency with which suspected tax havens have agreed to comply.

"It is absolutely necessary that [the OECD] implement and monitor the standards these nations have agreed to," he said.

glb/APD/dpa
Editor: Nancy Isenson