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Argentina charges HSBC for tax evasion ‘scheme’

Argentina's tax agency says it has charged British bank HSBC with helping more than 4,000 Argentines to commit tax evasion by stashing money in secret Swiss accounts.

Argentina charges HSBC for tax evasion 'scheme'
Photo: AFP

The Argentine tax authority (AFIP) said on Thursday that it had searched HSBC offices in Buenos Aires before moving ahead with the charges.
   
"We have filed a charge for tax evasion and illicit association relating to bank accounts in Switzerland," said AFIP director Ricardo Echegaray.
   
He said three agencies associated with HSBC in Argentina were suspected of aiding the tax evasion scheme.
   
AFIP said it had identified 4,040 people who allegedly sent money to overseas accounts, and almost all of the transactions were supervised by HSBC representatives in Argentina, the United States and Switzerland.
   
HSBC said in a statement that it "emphatically rejects (the charges) of participation in any illicit association, including any organization allowing the transfer of capital in order to evade taxes."
   
The charges are the latest woes for the banking giant, after former employee Herve Falciani leaked to French authorities data on thousands of HSBC customers, saying he wanted to expose tax fraud.
   
The leak sent shockwaves through the world of Swiss banking, long valued by wealthy individuals for its stability and traditions of banking secrecy, and led to a French probe into HSBC to determine whether it had also helped French customers avoid taxes.

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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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