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Cabinet seeks greater say on tax haven laws

(Keystone)

Switzerland is seeking to boost international cooperation to avoid a repeat of sanction threats against its financial centre.

The government said on Wednesday it wants to have a say in defining accepted tax practices and is willing to contribute a multi-billion credit line to strengthen the international financial system.

President Hans-Rudolf Merz, who also holds the finance portfolio, said Switzerland was seeking partners to make its voice heard within the Organisation for Economic Cooperation and Development (OECD).

He said the government would ensure that Switzerland is able to take part in discussions about criteria on so-called tax havens and banking regulations.

"Switzerland will no longer accept lists drawn up by the OECD," Merz told a news conference after a special cabinet meeting called to respond to the growing pressure on the Swiss financial centre.

Last week it was announced that Switzerland had been placed on a watch list of countries considered to only half respect OECD criteria in tax matters.

Merz was critical of the fact that Switzerland, although a member of the OECD, had had no chance to influence the policy of the organisation over providing the G20 group of major world economies with a list of compliant or partly compliant countries.

He said it was necessary to clarify the rules and organisations involved in setting conditions.

Japan

Merz added that Switzerland was willing to act following its decision last month to ease its banking secrecy and adopt OECD standards.

He said 14 countries had expressed an interest in renegotiating their double taxation agreements.

Negotiations with Japan are close to an agreement, according to Merz, while those with the United States will formally begin at the end of this month.

Merz said the cabinet decided to make only the first renegotiated double taxation agreement subject to a nationwide vote, provided some interest group succeeds in collecting the necessary signatures.

"It is likely that the accord with Japan will be ready first," he said.

Poland was also high on the list, while Germany – one of the harshest critics of Swiss tax policy – "is not a priority", according to Merz.

Switzerland has double taxation accords with more than 70 countries.

EU withholding tax

The cabinet reiterated that Switzerland has no intention of seeking the suspension of a bilateral treaty with the European Union on a withholding tax on assets of EU citizens held in Switzerland.

Merz ruled out an automatic exchange of information between Brussels and non- EU member Switzerland.

However, Switzerland is willing to discuss reforms, in particular a reduction of the savings tax rate, he said.

The government is waiting for the outcome of an EU internal tax reform. But at the same time the cabinet wants to consider its own proposals.

"We have time to study options. But we have to avoid coming under EU pressure," he said.

US and IMF

The Swiss government on Wednesday welcomed a decision by the G20 countries to provide about $250 billion (SFr287 million) for the IMF.

The cabinet decided to grant a credit line worth $10 billion – and subject to parliamentary approval - to help strengthen the international financial system hit by the global economic crisis.

"Switzerland is most interested in a rapid end to the crisis, and in a re-established stability of the international financial system. With its contribution Switzerland is assuming its international responsibility," a finance ministry statement said.

Merz plans to travel to Washington to attend a regular meeting of the IMF later this month and to meet the US finance minister, Timothy Geithner.

In another development, the Swiss ambassador to Washington, Urs Ziswiler, has been appointed as government coordinator in the US.

The largest Swiss bank, UBS, is involved in a legal conflict with US authorities over suspected tax fraud, while the government is about to launch negotiations on an amended double taxation accord.

swissinfo, Urs Geiser

In brief

Last month the Swiss government decided to ease banking secrecy rules and adopt OECD standards.

The move came amid increasing international pressure, in particular by the US, Germany and France.

As a result Switzerland is to re-negotiate its double taxation agreements with more than 70 countries.

However, rightwing political parties have threatened to challenge any weakening of banking secrecy to a nationwide vote.

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OECD conditions

Jeffrey Owens, director of the OECD's Centre for Tax Policy and Administration on Tuesday revealed the conditions that would allow Switzerland to leave the grey list.

Switzerland must conclude as many information exchange accords as possible before the next G20 summit in November, he said. OECD Secretary-General Angel Gurría had previously said that 12 such accords were required to make it to the white list.

"I won't say the Switzerland will have a hard time if it does not do so," Owens told Le Temps newspaper. "But I would certainly put the month of November into my diary."

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