The economics commission of the Swiss House of Representatives on Monday opened two days of talks behind closed doors on an issue, which has led to increasing pressure on Switzerland - banking secrecy.

The commission, chaired by a Social Democrat member of parliament, Rudolf Strahm, is to hold hearings in Berne with the finance minister, Kaspar Villiger, and representatives of the Federal Banking Commission and Federal Police Office.

Originally, the idea was to invite representatives of the European Union and Organisation for Economic Development and Cooperation - at times two of the most outspoken voices against Swiss banking secrecy laws.

However, invitations were not sent out. Strahm confirmed last month that the prospect of participation by two of the most critical voices had caused some "nervousness" in Zurich's Bahnhofstrasse, home of the Swiss banking community.

A second phase follows on September 5 when a delegation from Sweden will come to Berne for talks on tax harmonisation and banking secrecy. Sweden is next in line to take over the six-month presidency of the EU.

Leaders of EU countries, meeting in Portugal in June, decided to lift banking secrecy step-by-step for non-resident bank account holders. At the same time, the EU decided to open talks with non-EU members, including Switzerland, to try to settle the question of tax evasion.

Villiger has repeatedly said that Switzerland is open to dialogue in attempts to prevent tax evasion and has no interest in torpedoing the EU member states' fiscal cooperation plans.

However, he has emphasised that banking confidentiality is not up for negotiation. He said Switzerland would only take alternative steps if EU measures were to cover all member states' territories and if all the major financial centres outside the EU were to take similar steps.

The most important weapon against tax evasion in Switzerland is a withholding tax. Most forms of capital income are subject to this at a rate of 35 per cent, which is high by international comparison.

However, shareholders and recipients of interest payments resident in Switzerland are entitled to a full return of the withholding tax.

swissinfo with agencies

In compliance with the JTI standards

More: SWI swissinfo.ch certified by the Journalism Trust Initiative