Both houses of parliament have passed a law revision that means tax evaders will not always have to be told if Switzerland sends information about them to other countries. The move further loosens Swiss banking secrecy laws in order to avoid a global backlash.
The Global Forum on Transparency and Exchange of Information for Tax Purposes advised Switzerland in 2011 to take measures to increase its tax transparency and avoid landing on a global blacklist. The Global Forum is a division of the Organisation of Economic Co-operation and Development (OECD).
The Global Forum gave the Swiss three specific suggestions, at least one of which they must fully implement to be accepted to the second phase of the Forum’s peer review and examination process testing countries’ transparency in the global tax landscape. Parliament’s decision to loosen data exchange laws helps achieve those conditions.
Parliament decided on Thursday that people suspected of tax evasion whose information is being sent to another country do not have to be informed of this if the other country can prove that telling them would hinder the investigation.
The argument over the revision brought up questions about whether such a move goes against clauses in the Swiss constitution related to guarantees of transparency in legal processes. In the end, cabinet and the majority in parliament concluded that passing the revision was in Switzerland’s best interest to meet the OECD’s demands and avoid possible sanctions.
No stolen data
However, in the consultation phase for the legal revision, cabinet decided not to loosen requirements when dealing with stolen tax data. Originally, cabinet had wanted to allow Switzerland to send such data to other countries as long as those countries did not have a hand in procuring it. However, after outcries from critics who said such a move would incentivise criminal acts since stolen data would become a commodity, cabinet dropped the plan.
The question of sharing stolen data is likely to come up again, as hundreds of international investigations are currently blocked due to the Swiss policy.
Parliament must re-approve the revision related to data exchange at the end of the current legislative session in order for it to become law. This is a formality that is expected to go through with little opposition.
Switzerland’s banking secrecy laws have long been under fire from both foreign governments and international organisations, particularly when it comes to data transparency to ensure no tax evasion has taken place. In 2009, Swiss bank UBS paid a $780 million fine to settle a United States tax investigation after it was revealed it had helped tax evaders hide their money, and Credit Suisse recently appeared before the US Senate to defend its actions in the face of similar charges.