Cabinet sets priorities for bilateral tax talks

Reuters

Switzerland will aim to conclude 12 double-taxation accords by the end of 2009 to comply with Organisation for Economic Co-operation and Development (OECD) conditions.

Finance Minister Hans-Rudolf Merz said the cabinet had decided to give the official green light for a new round of tax treaty negotiations primarily with industrialised countries.

However, Merz said further discussions were necessary with the OECD to make clear that it would take more time to put into force the new fiscal agreements.

“It is impossible to have 12 accords ratified by the end of December,” Merz told a news conference on Wednesday.

Switzerland has been put on a watch list by the OECD and could face sanctions if it fails to live up to pledges to combat tax fraud amid a war of words with the Paris-based organisation.

Merz, who is also this year’s Swiss president, said he was optimistic that negotiations would unfold swiftly. But he pointed out that the accords would have to be ratified by parliament and could even face a nationwide vote.

To date 23 countries – out of more than 70 – have notified Switzerland that they are interested in new accords on double taxation, according to Merz.

“They are all members of the OECD or the European Union, or countries that have a special economic importance for us,” he said.

He added it made no sense to speculate on which negotiations could be brought to a close first.

Talks are underway with the United States, Japan and Poland.

Merz said talks with his counterpart from Singapore on Wednesday confirmed the government’s policy to deal with international pressure on its financial centre.

Confidence

A meeting between Swiss and US officials has already taken place in Bern, and a new round of negotiations is scheduled to occur in Washington in June.

Merz also said he was confident that a solution could be found with the US over a legal case pending against Switzerland’s largest bank, UBS.

He said he raised the topic during talks with his US counterpart, Timothy Geithner, in Washington ten days ago.

The US administration has not commented a proposal by Merz. However, two leading American newspapers have criticised Switzerland’s policy and called on the US government to reject a proposed trade-off.

Merz indicated Switzerland’s willingness to negotiate a double-taxation agreement, following an easing of international banking-secrecy rules to combat tax fraud, if Washington agreed to drop legal proceedings against UBS.

The US justice authorities have asked for details of more than 50,000 UBS customers suspected of tax fraud in the US.

The Swiss government earlier this year ordered the banking regulator to hand over data of 255 account holders to Washington despite banking-secrecy rules.

EU

Merz said he was astonished to hear that the EU wanted to renegotiate a bilateral accord concluded with Switzerland in 2004 to combat customs fraud.

Many of the 27 EU member countries had not yet implemented the agreement, he added.

Switzerland has not ruled out talks with the EU on a single accord on double taxation, but Merz said the country can not wait until Brussels has a mandate for such negotiations by its member states.

“We want to begin talks with individual countries and will watch the discussions,” he said. “But for now there seems no consensus for such negotiations.”

He made it clear that he does not expect the EU to find a common stance any time soon.

Brussels wants to introduce an automatic exchange of information of bank account holders within the EU and to put pressure on Switzerland, not an EU member, to follow suit.

However, Austria and Luxembourg have said they oppose such moves.

Urs Geiser, swissinfo.ch

Double-taxation accords

The Swiss government in March decided to ease banking secrecy amid a threat of sanctions by major powers.

It offered to renegotiate double-taxation accords to bring them in line with OECD standards to combat tax fraud.

The OECD wants so-called tax havens to conclude at least 12 fiscal accords by the end of the year.

Switzerland has double-taxation accords with more than 70 countries.

Negotiations are underway with the US, Japan and Poland. Twenty-three countries have shown an interest in amended fiscal accords, including Germany, Britain and Argentina.