US and Japan in frontline of tax talks

Keystone

The Swiss government has agreed to open negotiations with Washington and Tokyo on tax accords as part of plans to ease banking secrecy.

Finance Minister Hans-Rudolf Merz said further clarifications were needed before a possible review of a tax agreement with the European Union – Switzerland’s main trading partner – could be tackled.

Merz said Switzerland was giving priority to countries which expressed an interest in re-negotiating an agreement on double taxation and which are of primary importance to the Swiss economy.

“The United States finance minister, Timothy Geithner, rang me to announce Washington’s interest on March 13, about five hours after the Swiss cabinet announced its plan to ease banking secrecy,” Merz told a news conference on Wednesday.

He also pointed out a legal dispute between the main Swiss bank, UBS, and the US authorities over alleged tax fraud.

But Merz, who is also this year’s Swiss president, dismissed speculation that the cabinet was linking the tax talks to other issues pending with Washington.

He added that negotiations would begin as quickly as possible, but cautioned against expecting quick results.

Key trading partner

Japan, a key trading partner for Switzerland in Asia, was also a logical choice, according to Merz.

“We have been in negotiations for a double taxation accord with Japan, and have already completed about three quarters of it.”

In February both countries signed a major free trade accord to bolster bilateral relations.

Merz added that other countries, including Poland, the Netherlands and Denmark, were also high on the list.

Neighbouring France was mooted as a priority country last week, but it no longer features at the top. Germany, one of the harshest critics of Swiss banking secrecy and tax policies, has not yet lodged a request.

In total, Switzerland has double taxation agreements with about 70 countries.

Merz said the criteria, set by the cabinet, include prospects of a successful conclusion of negotiations and the risk of a referendum.

He reiterated that Switzerland was not prepared to make concessions without getting anything in return, and mentioned this could be better access by Swiss insurance companies to export markets.

EU and G20

The cabinet is due to meet for a special session on April 8 to discuss a strategy to defend the interests of Switzerland as a financial centre.

“The aim is to maintain the competitive edge and to avoid job cuts,” said Merz.

The case of the UBS bank in the US and plans for a possible reform of an accord with Brussels on a withholding tax on assets by EU citizens in Swiss banks will also be on the agenda of the meeting.

Merz again ruled out the introduction of an automatic exchange of information with EU member countries or the suspension of the withholding tax treaty in force since 2005.

He said the Swiss government had done its best to be invited to a meeting of the G20 group of the world’s major economies in London on April 2.

The conference is expected to discuss the global economic crisis and controversial blacklist by the Organisation for Economic Cooperation and Development (OECD) of so-called tax havens which could become the target of crippling sanctions.

However, Merz said he was confident that Switzerland would not figure on the list.

swissinfo, Urs Geiser

In brief

On February 13 the cabinet announced it was willing to adopt OECD standards and cooperate on international tax evasion.

The decision came as a result of increasing pressure, notably by the US and Germany, and prompted an outcry among Swiss parliamentarians.

Rightwing parties said they would try to force a nationwide vote to defend banking secrecy.

Switzerland has double taxation accords with about 70 countries and concluded a withholding tax accord with the EU.