ZURICH (AFP) - LIECHTENSTEIN said on Tuesday it had signed a deal with Britain to encourage British tax payers holding accounts in the principality's banks voluntarily to declare undisclosed assets.

'For the period between 2010 and 2015, the agreement provides special conditions to encourage the self-declaration of clients of Liechtenstein's financial service industry with tax arrears in the UK,' said the principality in a statement.

British clients who come forward voluntarily would be offered 'favourable conditions' in the settlement of their tax arrears.

These includes a reduced period in the assessment of outstanding tax claims from a regular 20 year limit to 10 years after March 1999, as well as the option of being taxed at a flat rate of 40 per cent.

'This agreement sets out a pragmatic path that includes in a cooperative way all parties involved: clients, financial intermediaries and both governments,' said Klaus Tschuetscher, Prime Minister of Liechtenstein.

Both governments will also begin negotiations for a double taxation accord, which would allow for information exchange to clamp down on tax cheats.

Liechtenstein caved in to international pressure and announced earlier this year that it would ease strict banking secrecy rules and offer more assistance on matters involving tax offences.

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