The U.S. Treasury Department said that it plans to begin negotiating a protocol with the government of Switzerland to exchange more tax information, opening a window on formerly secret Swiss bank accounts.
The move echoes an announcement made by the Swiss Federal Council on March 13, saying that the two countries intend to revise a tax treaty that dates back to 1996 (see Swiss to Relax Banking Secrecy Laws).
UBS and other Swiss banks have been under pressure to reveal more information to the Internal Revenue Service about their U.S. customers’ holdings. UBS agreed to pay $780 million to the IRS in a deferred prosecution agreement and reveal account information on about 300 of its U.S.-based depositors, but the IRS is still seeking information on about 47,000 other depositors. UBS has argued that revealing the other names would violate Swiss banking secrecy laws.
Now the tax treaty will be renegotiated so the two countries can exchange information for tax purposes to the full extent permitted by Article 26 of the Organization for Economic Cooperation and Development’s Model Income Tax Convention. The agreement was reached at the Group of 20 Summit of world leaders last week.
“As called for in the G-20 meeting in London, we believe that all countries must adhere to international standards for exchange of tax information,” said U.S. Treasury Secretary Tim Geithner (pictured) in a statement. “We welcome moves by Switzerland to implement international standards by agreeing to revise the U.S.-Switzerland tax treaty for the exchange of information for tax purposes with the U.S. I look forward to swift conclusion of an agreement; this agreement has the potential to serve as an example for other leading financial centers around the world, and I will continue to demand transparency from countries on behalf of American taxpayers.”
Negotiations are expected to begin April 28 in Berne, Switzerland.
Separately, the OECD announced that four more countries — Costa Rica, Malaysia, the Philippines and Uruguay — have committed to the OECD’s internationally agreed tax standard on exchange of information. They have officially informed the OECD that they are committed to cooperating in the fight against tax abuse, and that this year they will propose legislation to remove impediments to the implementation of the standard and will incorporate the standard in their existing laws and treaties.
They join other tax haven countries, including Liechtenstein, Andorra, Singapore and the Cayman Islands, that have recently agreed to exchange tax information to comply with the OECD standards (see More Tax Havens Disclose Secret Information).
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