The government’s call for a new law to bring tax matters into line with international standards hasn’t gone down well with cantons, newspapers or most politicians.
Critics fear so-called “fishing” expeditions, in which investigators trawl through masses of data of innocent people in the hope of netting someone who might be committing a crime.
On Wednesday Finance Minister Eveline Widmer-Schlumpf said the bill – for parliament to discuss – was aimed at enshrining rules on the exchange of information pertaining to account holders, as applied in double taxation agreements (DTAs) with other countries.
The cabinet insisted on the principle that administrative assistance would only be provided upon request in individual cases – group applications were ruled out – but pressure from the Organisation for Economic Co-operation and Development (OECD) seemed to be having an effect.
“We say ‘yes’ to groups, but we’d like the separate elements to be defined. There should be legal means as with individual cases,” Widmer-Schlumpf said.
No assistance would be granted if a request was based on stolen data or other acts punishable under Swiss law, she added.
Following a decision by the government in March 2009 to ease banking secrecy, Switzerland adapted or negotiated more than 30 double taxation agreements, granting international legal assistance not only in cases of tax fraud, but also for tax evasion and fiscal assessments.
This brought it into line with OECD standards – a requirement to stay off the OECD’s grey list of uncooperative tax havens set up in 2009.
However, support for the cabinet view was limited.
“This is a total breach of banking secrecy and all the promises that had been given,” said Hans Kaufmann from the rightwing Swiss People’s Party.
“For me, the new OECD regulations enable fishing expeditions.”
Thomas Sutter from the Swiss Bankers’ Association said Switzerland should limit itself to Article 26 of the OECD Model Tax Convention, according to which “countries are not at liberty to engage in fishing expeditions or to request information that is unlikely to be relevant to the tax affairs of a given taxpayer”.
Konrad Hummler, chairman of the Private Bankers Association, said Switzerland shouldn’t give in to the OECD “yet again”.
“Constant alterations result in uncertainty and are poison for Switzerland as a financial centre,” he said.
Switzerland’s 26 cantons were also unhappy. They claimed they had been rebuffed, since any tax assistance provided for foreign investigators cannot be used by cantons.
Andreas Huber, secretary of the Conference of Cantonal Finance Directors, said the cantons “regretted” the cabinet decision.
“Swiss tax authorities will as a result be disadvantaged compared with those abroad,” he said.
Huber pointed out that while such data could help taxpayers be assessed correctly, the situation could arise whereby tax collectors become aware of such data as a result of administrative assistance but would not be able to use it.
Daniel Vischer of the Green Party said it was “absurd” that Switzerland was buckling to foreign authorities but remaining tough internally.
“You can’t treat Swiss tax offices less favourably than foreign ones. The same laws must apply here and abroad,” he said.
“Ambivalence and hesitation”
“Ideas diverge somewhat,” Widmer-Schlumpf euphemistically admitted. That was the view of the Neue Luzerner Zeitung, which went on to accuse the cabinet of using “salami tactics”.
“In saying goodbye to tax secrecy, the cabinet’s policy remains one of small steps.”
Le Temps newspaper in Geneva described the strategy as “hesitant”.
“It’s important to remind oneself that the text approved by the government [on Wednesday] is an abandonment of the position initially defended by Switzerland,” it wrote.
The paper explained how the OECD let Switzerland know that it didn’t agree with Bern’s very restrictive interpretation of the OECD standards.
“The cabinet had to fold, and the text adopted bears the hallmarks of this change of mind. The ensuing situation is confused, because a considerable number of conventions have been signed on the basis of initial Swiss ideas, which have since been abandoned,” it said.
“The last straw was when an internal enquiry in May showed it was not so much by calculation that the Swiss ended up defending their original position but by the negligence of government officials.”
The paper said this would have remained a minor issue had it not reflected, once again, “ambivalence and hesitation at the highest levels concerning the important matter of banking secrecy”.