Switzerland’s longstanding banking secrecy laws are about to become as holey as Swiss cheese after authorities caved in to pressure from international tax authorities.
Swiss President Hans-Rudolf Merz announced steps on Friday to bring the country in line with other countries that have been lifting the veil on the bank accounts that have traditionally been used to hide assets from taxes. Last week, a number of other tax havens, including Liechtenstein and Andorra, also announced steps to comply with guidelines from the international Organization for Economic Cooperation and Development (see More Tax Havens Disclose Secret Information).
The United States and other countries have been pressing Switzerland to revise its banking secrecy laws. Swiss bank UBS agreed to pay $780 million to the Internal Revenue Service in a deferred-prosecution agreement and to disclose the account information of about 300 of its depositors who have been accused of tax evasion. But the bank has been shielding the identities of about 47,000 other depositors whom the IRS has been seeking to ferret out with “John Doe” summonses, citing Swiss banking laws (see UBS Refuses to Disclose Tax Shelter Accounts). Tax authorities in the U.S. and other countries are eager to probe the secret holdings of wealthy tax evaders in order to raise much-needed revenue without hiking rates on legitimate taxpayers.
“Against the background of the financial crisis, international cooperation has grown stronger, particularly against tax crimes,” said Merz (pictured), according to the Associated Press.
Merz said that Switzerland would now adopt the OECD’s standards for countries that are fighting tax evasion. Monaco, another longtime holdout on the tax haven front, has also agreed to adopt the OECD standards, The New York Times reported Monday.
In addition to those countries, the OECD noted that Singapore and Hong Kong have recently stated that they intend to remove domestic hurdles to information exchange. Belgium, which already signaled a move toward the international standard last year with a bilateral tax treaty with the U.S., said that it would be adopting the same approach in other tax treaties.
Other recent converts include Bermuda, the Cayman Islands, and the British Channel Islands of Jersey, Guernsey, and Man.
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