- The Washington Times - Thursday, April 2, 2009

GENEVA (AP) - Switzerland said Thursday it has put into motion plans to cooperate on rooting out tax cheats, but critics questioned whether that would sufficiently dismantle banking secrecy as demanded by the Group of 20 economic powers.

Liechtenstein, Switzerland’s tiny Alpine neighbor, said it has already started negotiating with British officials and is ready to implement tough new standards.

The two countries are among a number of offshore banking centers that have accepted new guidelines in recent weeks as part of the campaign by the United States, Germany, France and Britain to crack down on tax evaders stashing their money abroad.

In return they were spared the fate of being blacklisted on a new register of uncooperative tax havens published Thursday by the Organization for Economic Cooperation and Development at the behest of the G-20. However, they were left in a gray area with a number of countries that still have to implement their commitment to accept new information-exchange standards.

Swiss President Hans-Rudolf Merz said he welcomed measures agreed at the G-20 meeting in London to spur economic recovery and could see that “the question of banking secrecy and administrative assistance in tax questions is receiving the highest attention.”

The Swiss Cabinet foresaw the G-20 action and had decided March 13 to accept international standards in cooperating with other countries by taking appropriate measures.

But Switzerland has only committed itself so far to provide banking information when it receives evidence backing up suspicion that a suspected individual is engaged in tax evasion.

The Swiss Bankers Association regretted the listing of Switzerland in the gray area.

“Switzerland doesn’t belong on such a gray list,” said spokesman Thomas Sutter. “It had accepted all the measures that were demanded by the G-20 countries before the meeting.”

Nonetheless, Sutter said, the Swiss Bankers Association will support the Swiss Cabinet in the upcoming negotiations for tax treaties with other countries.

Max Hohenberg, spokesman for the Liechtenstein government, said: “We have already declared that we will accept the OECD standards, so we view this announcement with a certain calmness. For Liechtenstein it’s simply a matter of implementing the standards. We want to resolve this issue once and for all.”

Matti Kohonen of the London-based Tax Justice Network, which campaigns against tax loopholes for rich individuals and corporations, welcomed the high priority the G-20 put on rooting out tax havens in its list of economic initiatives.

Kohonen noted that in the two weeks leading up to the G-20 meeting in London a number of tax havens signed up to new banking agreements in hopes of avoiding being listed as uncooperative.

However, he said, the proposed information exchange treaties “are based on request and on suspicion. But how can you have suspicion on secret accounts, so there will be very few cases put forward.”

Kohonen said the information exchange treaties should go beyond individuals’ bank accounts and include companies.

“Commodity trading takes place largely through offshore vehicles,” he said. “There should be a reform of international accounting standards to country-by-country reporting where offshore affiliates are listed as subsidiaries.”


Associated Press writer Balz Bruppacher in Bern contributed to this report.

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