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Business

US and Switzerland to negotiate on tax secrecy

Latest update : 2009-04-07

The US Treasury Department has announced negotiations with Switzerland to improve transparency in the two countries' bilateral income tax treaty. Last week G20 leaders pledged to clean up tax havens and fight tax fraud.

AFP - The United States and Switzerland will begin negotiations to amend their bilateral income tax treaty to provide for improved transparency, the US Treasury Department said Monday.
  
The announcement came following Group of 20 pledges last week to clean up tax havens and fight tax fraud and as bilateral relations have been strained by a massive tax fraud case involving Swiss banking giant UBS.
  
The negotiations to amend the 1996 treaty are expected to begin April 28 in Berne, Switzerland, the Treasury Department said in a statement.
  
"The two countries intend to revise the tax treaty 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 (OECD)" model income tax convention, the department said.
  
"As called for in the G20 meeting in London, we believe that all countries must adhere to international standards for exchange (of) tax information," Treasury Secretary Timothy Geithner said.
  
"We welcome moves by Switzerland to implement international standards by agreeing to revise the US-Switzerland tax treaty for the exchange of information for tax purposes with the US."
  
Switzerland formally decided on March 13 to ease banking secrecy and fully adopt OECD tax standards. The government recently approved talks with the US and Japan to reinforce tax cooperation.
  
Leaders at the G20 summit of industrialized and developing countries Thursday in London pledged, in a final communique, to take action against tax havens as part of an overhaul of financial regulation aimed at averting a repeat of the current global economic crisis.
  
"We stand ready to deploy sanctions to protect our public finances and financial systems. The era of banking secrecy is over," the leaders of 19 countries and the European Union said.
  
The US-Swiss tax talks come as US authorities press for more information from UBS on suspected tax evaders.
  
UBS admitted guilt to US tax fraud in February and paid a fine of 780 million dollars as part of a provisional deal to settle US tax fraud charges.
  
The bank also identified some 300 US clients who are suspected of tax fraud by US authorities.
  
The bank was forced by the Swiss financial regulator to hand over details on the suspects, raising an outcry in Switzerland where banks operate under strict financial privacy laws.
  
US officials in a subsequent lawsuit against UBS have requested details on 52,000 more UBS clients suspected of tax fraud.
  
But UBS, the world's largest manager of private wealth, has refused to hand over the information.

Date created : 2009-04-07

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