New Swiss tax law to end dispute

SWITZERLAND has proposed a bill that it says will provide the legal basis for banks, including Credit Suisse Group and Julius Baer Group, to resolve a tax-evasion dispute with the US.

SWITZERLAND yesterday proposed a bill that it says will provide the legal basis for the country’s banks, including Credit Suisse Group and Julius Baer Group, to resolve a tax-evasion dispute with the US.

The bill authorised Swiss banks to co-operate with US authorities and transfer information while safeguarding their interests, the government in Bern said yesterday. The Swiss parliament would consider the bill as soon as next week and it could come into force on July 1.

“The urgency is due to the US, which will not wait any longer with the past arrangement for Swiss banks,” the government said. “If a solution is not found soon, Switzerland risks further escalation.”

Switzerland, the biggest haven for offshore wealth, has been in talks with the US for more than two years to resolve a US justice department investigation of at least 14 financial firms that allegedly helped Americans hide money from the Internal Revenue Service (IRS).

The Swiss government wants to prevent another bank being indicted after Wegelin & Company pleaded guilty in a New York court in January to conspiring to help conceal more than $1.2bn from the IRS.

The bill would enable banks to pass on information on business relationships concerning US people and details on employees who worked with Americans, the government said. It did not allow for the transfer of client data, which can be passed on only through administrative assistance procedures under a tax agreement with the US.

Julius Baer, Switzerland’s thirdlargest wealth manager, informed some American clients this month that their accounts meet the criteria of a US request for data, the Zurichbased bank wrote in a letter.

The agreement might lead to total fines of as much as Sf10bn ($10.3bn), reports said.

“The Swiss won’t pay anything,” Swiss Finance Minister Eveline Widmer-Schlumpf said in Bern yesterday.

The programme was not up for discussion, said Ms WidmerSchlumpf, adding that Swiss banks will decide whether the proposal is useful to them.

“I am convinced that what at first glance seems to be painful for all is better than no solution,” Credit Suisse chairman Urs Rohner said in an interview with Neue Zuercher Zeitung, published this week. “To believe that one can just postpone this problem and that it will solve itself isn’t realistic.”

The department of justice was requesting delivery of generic data about closing of accounts and money transfers to help resolve matters, the bill said. Bank employees would be told first before data is passed to US authorities. The banks would set up a Sf2.5m fund to support affected employees.

Switzerland is trying to shed its image as a tax haven after attracting $2.1-trillion to cross-border accounts during an era of undeclared money that started to crumble after UBS avoided prosecution in 2009 by paying $780m. The bank admitted it fostered tax evasion and gave the IRS data on more than 250 accounts. The turnover by UBS of a further 4,450 names, in the face of Swiss laws barring most disclosures of client data, set a precedent for the current settlement. Bloomberg