Liechtenstein is to ease its bank secrecy rules and swap information with foreign governments to help combat tax fraud and evasion.
The tiny principality will now adopt OECD standards on cross-border tax negotiations and offer bilateral tax deals on co-operation.
The BBC reports Liechtenstein has been on an OECD blacklist of tax havens and has been under pressure to co-operate with other states' investigations into tax evasion.
As the world economy deteriorates, European governments have been seeking help in the fight against tax evasion as they try to increase tax revenues.
Liechtenstein came under pressure to ease its tax laws last year when Germany bought data from a former bank employee and used it to open a tax evasion investigation.
In a deal signed in December, the principality agreed to grant US tax authorities access to information kept by its banks on Americans in certain cases of tax evasion.
The US-Liechtenstein deal will come into force in 2010 and will look at tax cases from 2009 onwards.
Liechtenstein's banks have 200 billon Swiss francs ($US165 billion) in assets, compared with Swiss banks' assets of 4.5 trillion Swiss francs.
