OECD tax forum complains Swiss making slow progress

The OECD tax forum would like to make it harder to hide your stash Keystone

Switzerland has still not met international standards on tax transparency, potentially putting investments at risk, a global tax forum warned Friday in Jakarta.

This content was published on November 22, 2013 - 21:07 and agencies

Switzerland is one of five nations that either failed to share taxpayer information with other countries or to gather information on beneficial ownership of corporate entities registered on their territory, or both, said the Global Forum on Transparency and Exchange of Information for Tax Purposes.

The other countries were Luxembourg, the British Virgin Islands, Cyprus and the Seychelles.

Pascal Saint-Amans, director of tax policy at the Organisation for Economic Co-operation and Development (OECD), which oversees the forum, said big international companies, banks and agencies may now think twice about investing through these jurisdictions.

"It is a question of reputation. There will be pressure on companies to explain why they are doing business in jurisdictions which are not clean from a Global Forum perspective," he said.

The Group of 20 leading economies, which has asked the OECD to lead efforts on curbing international tax evasion and avoidance, has said it wants to put pressure on "non-cooperative jurisdictions".

Switzerland failed because it did not have the required legislation facilitating tax co-operation in place. The other four nations failed to get a passing grade because the legislative structures they put in place did not function well enough, Saint-Amans said.

The Swiss State Secretariat for International Finance, said Switzerland hoped to have the legislation in place shortly and to be in a position to be deemed compliant with the international standards next year.

Some progress

Switzerland is, despite being considered as having made some progress according to Swiss representative Fabrice Filliez, still one of 14 nations that have still not passed the forum’s so-called phase one of peer review.

This phase is a review of “each jurisdiction’s legal and regulatory framework for transparency and the exchange of information for tax purposes” according to the OECD. The second phase considers how the legislation and regulations are effectively implemented, with only 18 out of 50 countries reviewed so far considered fully compliant with the forum’s standards.

The Swiss could be accepted into the second phase of the review if it presents an additional report. It would “demonstrate the progress made,” pointed out Filliez.

Switzerland improved its position in Jakarta, but “it must pursue its work to ensure the conformity of its legislation, which is also in the interest of the Swiss financial sector,” he added. 

Switzerland is an active member of the forum, belonging to the peer review bureau as well as the more exclusive steering group. The Swiss also want to play a role in the implementation of the automatic exchange of tax information, which they expect to become the new international norm, and would be interested in joining one of the liaison groups working on the issue.

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