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Swiss to cooperate in tax investigations

Sat., March 14, 2009

Banks will identify account holders

GENEVA – Switzerland’s days as a safe haven for the world’s tax evaders are numbered.

Under pressure from the United States and other troubled economies, the Swiss government announced Friday that it will cooperate in international tax investigations, breaking with a long-standing tradition of protecting wealthy foreigners accused of hiding billions of dollars. Austria and Luxembourg also said they would help.

“Against the background of the financial crisis, international cooperation has grown stronger particularly against tax crimes,” Swiss President Hans-Rudolf Merz said.

But he insisted that the secrecy of Swiss banks would remain intact except when other countries provide compelling evidence of tax evasion.

The decision was a hard one for the Swiss, whose renowned discretion has long attracted famous foreigners as well as refugees from political or religious persecution.

Swiss banks hold an estimated $2 trillion of foreign money, and financial services add about 12 percent of GDP to the national economy. According to the Boston Consulting Group, those holdings amount to one-fourth of the world’s foreign-owned assets.

The famed “numbered accounts” that do not bear the owner’s name will still be available for clients willing to pay for added anonymity. But the government will now be able to demand account holders’ identities in cases of suspected wrongdoing and share that information with foreign authorities.

Switzerland’s move comes ahead of a meeting next month in which world powers will discuss stepping up their fight against tax cheats.

The greatest pressure has been on Switzerland, which has been embroiled in a dispute with the United States over wealthy Americans who have stashed money in its biggest bank, UBS AG.

Hoping to avoid being blacklisted as uncooperative tax havens, other countries have also announced plans to open their books to foreign tax inspectors.

Austria and Luxembourg said Friday that they would offer more help on tax investigations. Over the past month, leaders have made similar promises in Singapore, Liechtenstein, Bermuda, the British islands of Jersey and Guernsey, and tiny Andorra on the border between France and Spain.


 

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