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TAX EVASION

Right-wingers aim to keep Swiss bank secrecy

Right-wing politicians in Switzerland have launched an initiative to defend Swiss banking secrecy from being chipped away to meet concerns about tax evasion.

Right-wingers aim to keep Swiss bank secrecy
Finance Minister Eveline Widmer-Schlumpf: her tax evasion proposals face opposition. Photo: Federal Chancellery

A committee, supported by elected members of the Swiss People’s Party (SVP), the Liberals, the Christian Democrats and the Ticino League (Lega), have until December 4th 2014 to collect 100,000 signatures to put the proposal to a national vote.

The bid was revealed on Tuesday in the federal gazette.

The text of the proposal calls for the continued protection of the private sphere, particularly with regards to financial information.

It is opposed to a planned change to Swiss tax law, introduced by Finance Minister Eveline Widmer-Schlumpf last Thursday, which aims to better track tax evasion in the country.

A consultation period on the policies proposed by Widmer-Schlumpf ends in September.

The right-wing initiative also surfaces as parliamentarians in Bern are grappling with a deal made by the Swiss federal cabinet with the US government.

This would force Swiss banks to pay American authorities in order to win legal closure over tax evasion cases involving US citizens.

The amount of the penalties has not been disclosed but some newspaper reports have put the figure as high as ten billion francs ($10.5 billion).

A dozen of the country’s largest banks are expected to make individual deals with the US but any disclosure of confidential client information would require an amendment to Swiss law.

The SVP in particular has been critical of the federal government’s desire to better control tax evasion in Switzerland.

“In the future, every citizen will be considered like a potential criminal,” the party said in a statement issued last week.

Christophe Darbellay, chairman of the Christian Democrats, is also opposed to the proposed changes.

“It’s a clear attack on banking secrecy,” Darbellay said according to a report from the ATS news agency.

“There is nor real need to change the law so fundamentally.”

Left-wing parties, such as the Socialists, say it is about time tax evasion was treated as seriously in Switzerland as tax fraud.

The cantons also support the federal government’s right to give them the authority to have access to bank account data, which is currently denied to them.

Under the proposed initiative, information about the accounts of people living in Switzerland could only be transmitted in the context of criminal cases.

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TAX EVASION

Switzerland’s banks remain among the world’s most secretive

Despite the progress made over the years, the Swiss financial sector continues to be one of the least transparent in the world. But there is good news too.

Switzerland’s banks remain among the world’s most secretive
Switzerland remains one of the world's least transparent nations. Photo AFP

Switzerland is in the third place in the 2020 Financial Secrecy Index released by the non-governmental organisation (NGO) Tax Justice Network (TJN), which rates 133 nations based on their financial transparency.

Two other European countries, Luxembourg and the Netherlands, are also ranked among the top 10 least transparent nations on the TJN’s list.

Despite being in the third place, Switzerland ranks better this year than it did in the previous edition of the Index, which is released every two years — it slipped from the first to third place. The Cayman Islands and the United States took the first and second spots, respectively.

Switzerland reduced its risk of being an offshore haven for tax cheats by 12 percent, “finally improving enough to move off the top of the index”, TJN said. 

READ MORE: Switzerland's strangest taxes – and what happens if you don't pay them

This improvement is mainly due to Switzerland extending its international network for the automatic exchange of customer information to more than 100 countries. 

Also, in a referendum held last year, Swiss voters accepted the Federal Act on Tax Reform and AVS Financing (TRAF). This legislation introduced major changes in the Swiss tax system by ending some preferential tax schemes and replacing them with new regulations which are in line with international standards.

This tax reform prompted the European Union to change Switzerland's status from ‘tax haven' to one which is EU-compliant, removing strict controls on transactions within the EU. 

So why, despite all the reforms, does Switzerland still rank among the world’s least transparent nations?

According to a Swiss NGO Alliance Sud, wealthy people from poor countries can still hide their money here from the tax authorities of their home nations.

Alliance Sud noted that despite the progress made in the past years by Swiss financial institutions, “the fight against tax evasion remains insufficient”.

Switzerland is the world’s biggest centre for managing offshore wealth, with a quarter of global assets invested here.

For years, it has been placed on various lists of tax havens where wealthy foreigners could park their money. Faced with widespread criticism for this practice, Switzerland passed an anti-money laundering law in 1997 and introduced strict regulations against tax evasion.
 

 

 
 

 

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