Switzerland has officially agreed to a raft of measures to combat the tax avoidance tricks of multinational companies. More than 100 countries have pledged to tackle the so-called base erosion and profit shifting (BEPS) shenanigans.
Huge companies, such as Starbucks, Amazon and Fiat, have been publically taken to task by the European Union and the Organisation for Economic Cooperation and Development (OECD) over the way they distort their tax bills. This is achieved by accountancy tricks that legally ghost profits from where they are earned to low tax jurisdictions.
This long-running escapade is more often than not pulled off with the full knowledge and cooperation of countries that compete for the regional headquarters of multinationals. During the BEPS probe, Switzerland was named more as a peripheral offender compared to the likes of Luxembourg, Ireland and the Netherlands.
Switzerland was among the nations that thrashed out the OECD BEPs Conventionexternal link in November. On Wednesday, Swiss officials signed the document in Paris along with nearly 70 other countriesexternal link. The deal will now go out to consultation and then to a parliamentary vote before it can be finally implemented in Switzerland.
If formally adopted, the BEPS Convention will oblige Switzerland to adjust double taxation agreements (DTAs) with other countries. A Swiss government statement on Wednesday said an initial batch of 14 countries, including India, Italy, Luxembourg and Turkey, have been earmarked for such treatment.
Further DTAs could be made BEPS compliant at a later date, either in batches of countries or bilaterally, the Swiss statementexternal link read. Switzerland would insist on a mandatory and binding arbitration clause in all its treaty amendments, the statement added.