Switzerland debates under pressure from USA and European
Switzerland debates under pressure from USA and European Neghibors to make Banking Secracy Laws more flexible to enable the reach of Tax Collectors of other countries, under the threat of being blacklisted by G-20, of which India is also a Member.
What India is doing in this respect ?
Swiss President and Finance Minister Hans-Rudolf Merz gestures during a press conference on the financial crisis, banking secrecy and international relations, at the Geneva press club,yesterday, in Geneva , Switzerland . With the largest Swiss bank UBS AG in a showdown with the US government over wealthy American tax evaders, Switzerland 's federal government has been dealt the unenviable task of avoiding sanctions abroad while gently burying the myths at home it has helped create about confidential banking.- AP
BERN, March 6 Switzerland is bracing for a monumental change in a tradition of banking secrecy that survived pressure from Nazi Germany, World War II and numerous other crises over the last 75 years.
It will have a hard time withstanding an American legal onslaught intact.
With the largest Swiss bank, UBS AG, in a showdown with Washington over wealthy American tax evaders, Switzerland 's federal government has been dealt the unenviable task of avoiding sanctions abroad while gently burying the myths at home it has helped create about confidential banking.
Rudolf Merz, Switzerland 's president and finance minister, was still taking a tough stance yesterday. "I cannot imagine how we could abolish banking secrecy," he told reporters. "It's part of the social idea, the mentality of our country. It's the protection of privacy."
But others, including Oswald Gruebel, a widely respected banker who came out of retirement last week to head UBS, are suggesting bank secrecy laws will have to be changed to ease the pressure being put on this small Alpine nation.
"It's questionable whether we can continue to hide tax evaders behind banking secrecy," Gruebel told the newspaper Finanz und Wirtschaft in an interview published last weekend.
On Wednesday, a US Senate committee criticised UBS for evasive answers on about 50,000 American-held accounts Washington is interested in, and authorities in Switzerland 's European neighbours are growing equally impatient.
A three-member panel will present options to the full government today on what to do about the demands.
The fight recalls the uproar in the 1990s over Jewish accounts left unclaimed after World War II. Switzerland failed initially to gauge mounting pressure from the US , and Swiss banks were forced into a US$1.25 billion (RM4.65 billion) out-of-court settlement with the descendants of Holocaust survivors.
This time, the squabble is over how the Swiss assist foreign authorities investigating tax evasion. Switzerland differentiates between the crime of tax fraud and the minor offense of evasion, and providing assistance to foreign governments probing tax evasion is punishable by law.
Switzerland passed its banking secrecy laws in 1934 during a worldwide depression and under the threat of espionage by France and Germany , which aggressively courted Swiss bank employees to divulge the names and data of customers. Strict penalties were imposed for violating bank confidentiality.
Still, secrecy rules have eroded. Swiss officials have retooled the rules over the past two decades to allow cooperation with governments trying to reclaim assets stashed in Switzerland by despots before they were deposed.
But expanding the changes to deal with all foreign tax evaders would be much more sweeping.
UBS has formally accepted responsibility for helping Americans hide assets from the US government and agreed to pay US$780 million in fines and restitution. It also turned over the names of about 300 US clients that possibly committed tax fraud, but it is not giving the Internal Revenue Service the names of all American citizens who maintained secret accounts with the bank.
At the Senate hearing Wednesday, senior UBS executive Mark Branson said the bank could not disclose much of the information sought by US tax authorities because it would put employees at "serious risk" of criminal prosecution under Swiss law.
The Swiss government refused to send a representative to the hearing.
But Justice Minister Eveline Widmer-Schlumpf visited Washington earlier this week and has shown some softening of the national position. She said the government would consider helping foreign authorities investigating "gross tax evasion" - a new distinction that has not previously existed.
The government is in a tough spot, battling to avoid being blacklisted as an uncooperative tax haven when representatives of the Group of 20 leading economies meet in London in April. But it is struggling to get unified support at home, with secrecy changes being vehemently opposed by two pro-business parties in Switzerland 's broad governing coalition.
Merz said Switzerland is ready to talk with the United States and European neighbours that are frustrated over money flowing out of the reach of tax collectors. He said the willingness to negotiate should make the G-20 reconsider threats to put Switzerland on any blacklist.
He predicts a "dynamic development" in Swiss law, and many people think it is increasingly likely that will mean dropping the differentiation between tax fraud and evasion.
Gerhard Roth, a tax expert and managing partner at the Swiss law firm GHR, calls it an "arbitrary distinction created to facilitate tax evasion."
"If Switzerland wants to save banking secrecy it needs to go on the offensive now," Roth said. "In today's world you can't argue anymore that it's morally right to place banking secrecy above tax evasion." AP