Friday, March 13, 2009

Swiss bank secrecy - fraying, crumbling

TJN is travelling today; apologies for late and scattered postings. Switzerland, as you may have heard, is now relaxing its bank secrecy provisions, with a decision to adopt OECD standards for the first time. This is the end of tight bank secrecy, though information won't flow freely under feeble OECD rules. As Bloomberg put it (condensed version):

"Switzerland will renegotiate its agreements with other nations and cooperate on cases of tax evasion as well as fraud, Finance Minister Hans-Rudolf Merz said. The nation doesn’t want to land on the Organization for Economic Cooperation and Development’s “black list” of tax havens, he said.

“This is a softening of absolute bank secrecy” and “it won’t be met with joy at all the banks,” Merz said. .. . Liechtenstein and Andorra, which are currently on the list of tax havens, said yesterday they would comply with OECD standards for transparency and information exchange." The official Swiss statement is here.

A TJN contact who was at the press conference said (edited):

"This means that the difference between tax fraud and simple tax evasion will be abolished in relationship between Switzerland and foreign countries.I appreciate this decision as a step in the direction of supporting a level playing field.
This will not mean a authomatic information exchange.Heavy problems will remain:
- it will not change things until new double tax treaties are negotiated between Switzerland and the other countries
- problems with the EU remain unresolved
- Switzerland will try to protect old clients with a kind of grandfather clause. This could be a kind of tax amnesty. This will depend on negotiation with other countries.
- this will also allow different standards with different countries. We fear that developing countries will have less favourable solutions.
The Finance Minister confirmed during the media conference that Switzerland figures actually on the provisional black list of the OECD. This is very quickly my first reaction at the end of the media conference of our Finance Minister.

Reuters has written a handy factbox explaining some of the things that have been happening. Here.


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