Switzerland is due to commit to a new global standard on exchanging tax information automatically, another move to change the country's notorious status as a secretive jurisdiction.
Switzerland has promised to exchange tax information automatically with other countries as countries continue to push the Alpine state to squeezing global tax evasion, the Financial Times reported.
At a ministerial meeting in Paris today, the country was expected to commit to a new global standard on automatic information exchange, which was described as “a very powerful new tool to tackle cross-border tax evasion and non-compliance”, the publication said.
So far, the official Swiss government website carried no announcement of such an agreement.
The Swiss Bankers Association, meanwhile, told this publication in a statement: "The Swiss Bankers Association (SBA) has accepted the automatic exchange of information as a global standard for over one year and contributed constructively to the drafting process at OECD level."
"It is not a surprise for the banks in Switzerland that our country will join the OECD declaration on the automatic tax information exchange. The banks in Switzerland are willing to adopt the automatic exchange of information along with other financial centres, provided that the exchanged information is only applied for tax purposes. Reciprocity should apply and structures like trusts be part of information exchange. Furthermore the banks expect fair solutions for untaxed assets of the past in order to implement the standard with each country," it said.
Swiss banking, home to an estimated SFr5.56 trillion ($6.36 trillion) of assets in total, faces growing pressure against its historic bank secrecy legislation. Out of the SFr5.56 trillion figure of assets, about half of that sum is run for foreigners (Source: Swiss Bankers Association). The country is home to more than 300 banks. Around a third of that number have signed up to a US-Swiss accord, originally set up last August, under which Swiss banks can state whether they think they are, or are not, at risk of having broken US tax laws, in return for different, or no, sanctions. It is also understood that a number of prominent Swiss and other non-US banks are being investigated by US authorities.
The country's banks have been targeted ever since UBS, the nation's largest bank (which issued Q1 results today) agreed to settle civil and criminal charges in the US for its alleged help for tax evaders. A number of banks have been investigated, and in the case of Wegelin, Switzerland's oldest bank (1741), it has ceased to operate in the US and its Swiss remnant has been folded into a new structure.
The FT said the declaration, which is being signed at the Organisation for Economic Co-operation and Development in Paris, will commit countries to swiftly implement the new global standard. It will require them to collect and exchange information on bank accounts and the beneficial ownership of companies and other legal structures such as trusts.
Switzerland will, the report said, joint least 44 countries in signing the agreement, which includes other members of the OECD, the G20 group of leading countries and offshore centres such as the Cayman Islands and Jersey. The global standard has been developed by the OECD and endorsed by the G20.
Defenders of offshore tax jurisdictions, such as the Washington DC-based CATO Institute, argue that such places perform a global economic role by putting other, higher-tax jurisdictions under pressure to keep tax rates lower than they would otherwise be. Critics say these places siphon off much-needed revenues from indebted nations and distort global trade and investment.