Switzerland Among Laggards in Global Hunt for Tax Cheats

Friday, 19 Apr 2013 02:34 PM

 

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Fourteen countries, including Switzerland, were called out on Friday by the Paris-based Organisation for Economic Co-operation and Development (OECD) for not meeting new global standards meant to crack down on tax dodgers.

The standards, which call for automatic data exchange between countries when tax cheating is suspected, reflect a tougher approach in recent years by the United States, Britain, Germany and other developed countries toward tax avoidance.

The OECD, a club for wealthy nations, issued a report on the topic to the Group of 20 finance ministers meeting at the International Monetary Fund and World Bank semi-annual conference in Washington.

Besides Switzerland, the United Arab Emirates and Panama were among the 14 countries named as failing to meet the OECD's Phase 2 standard of effectiveness in international information exchange.

"Significant progress has been made ... but significant progress remains to be made," Pascal Saint-Amans, director of OECD's Centre for Tax Policy, told reporters.

"Switzerland for the time being is stuck," he said, acknowledging that Switzerland has made progress, but is not done yet with changing its ways, Saint-Amans said.

The Alpine nation, an historical bastion of banking secrecy, has been under fire for several years for turning a blind eye to the sheltering of taxable income by its banking sector.

UBS AG, Switzerland's largest bank, paid $780 million in 2009 and handed over thousands of client names to settle U.S. charges that it helped U.S. citizens hide funds.

Tax evasion has dominated European headlines in recent weeks, following the admission by a disgraced former French minister that he held a Swiss account and the recent leak of thousands of holders of secret bank accounts worldwide.

Earlier this week, sources told Reuters that the Swiss and U.S. governments were weighing a possible solution to end their long-standing dispute over Swiss banks accused of helping wealthy Americans evade billions of dollars in taxes.

Formed after World War II to promote cooperation and reconstruction, the OECD can urge change on its 34 member nations, but it is largely up to individual governments to carry it out.

"There still continues to be a disconnect between letter of the law and application of the law," said Heather Lowe, counsel for Global Financial Integrity, an advocacy group.

© 2014 Thomson/Reuters. All rights reserved.

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