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Monday
Jul202009

Switzerland to give up tax haven status

Switzerland moved closer to moving away from sanctions as a ‘grey’ tax haven by signing a new double taxation treaty with the UK.

Worldwide, financial centres like Switzerland with bank secrecy laws are blamed by the Organisation for Economic Cooperation and Development (OECD), which represents 30 developed economies, for hiding some US$5 – 7 trillion offshore so the profits they produce evade taxes.  Switzerland, whose private banks manage around US$2 trillion of foreign wealth, aims to secure 12 new bilateral tax deals by the end of 2009 that could allow it to be removed from an OECD "grey list" of states that need to improve tax cooperation.

Britain is the tenth country with which it has initialled an agreement including the extended assistance clause in tax matters after Denmark, Luxembourg, Norway, France, Mexico, the USA, Japan, the Netherlands and Poland, the Swiss finance ministry said.

The agreement would only be published once it was signed at a ministerial level and would only come into force once parliament has approved it.

However, the Swiss government also wants the first of these double taxation agreements to include the OECD rules to be subject to a referendum.

Fearing sanctions from the G20 countries – which are also members of the OECD -Switzerland and other tax havens agreed in March to relax bank secrecy and accepted for the first time to share certain bank client data with other jurisdictions once bilateral tax treaties are ratified.

The US tax authorities have delayed action against Swiss bank UBS pending ratification of tax treaties. UBS has consistently failed to give details of 52,000 accounts held by US companies and individuals to the IRS

At a recent conference in Miami organised by Offshore Alert, a specialised media organisation focused on financial crime, it was revealed the US alone lost an estimated US$100 billion dollars annually to offshore tax evasion.

The conference heard that the secrecy involving transactions between companies and banks in tax havens may have contributed to the global recession as no one was sure which organisation owned ‘debts’ due to non-disclosure of financial information.

 



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