Switzerland Asks OECD To Explain How It Brands Countries As Tax Havens

Tom Burroughes

30 April 2009

The government of Switzerland, which faces international pressure to erode its bank secrecy laws, has asked for details on how the Paris-based Organisation for Economic Co-Operation and Development recently chose to decide which offshore financial jurisdictions were helping to root out tax evaders.

Swiss president and finance minister, Hans-Rudolf Merz, said in a letter to OECD secretary general Angel Gurria that the Paris-based organisation produced its recent report on tax havens without clearly explaining how it arrived at its conclusions.

Switzerland, along with jurisdictions such as Monaco, Singapore and Liechtenstein, has endorsed OECD standards for exchange of information in the wake of rising pressure on these centres to open up their banking systems. Countries such as the UK and US, which face ballooning budget deficits, are trying to stem leakage of tax revenues.

At the end of the G20 summit in London earlier this month, the OECD – made up of leading industrial and emerging market countries – drew up three lists of regimes that had promised to exchange information on tax as well as countries that were considered not to be co-operative. In Switzerland’s case, it has been placed on a watch list of countries that have not fully complied with OECD standards on exchanging information for tax matters. The Swiss banking industry has argued that the OECD member states are hypocritical because countries such as the UK and US are, on some definitions, tax havens.

It is unclear which international bodies have been asked to monitor progress in complying with information-sharing agreements, what countries are to be monitored and what criteria will be used, Mr Merz said in the letter, which was released to the media.

“The way in which the OECD Secretariat has prepared and communicated the list was contrary to the decision-making process of the OECD and to the principles of good governance,” his letter said.

Mr Merz said he has asked how the OECD chose to put countries on a list of tax havens, what criteria were used to put them on the list and what is the OECD’s definition of a tax haven. He also asked who will propose sanctions against a tax haven if it is considered not to be co-operative.