Swiss secrecy could slip further on plan to scrap anonymous shares

Swiss secrecy could be rolled back further under a plan to eliminate a class of company share that can be used to help owners dodge taxes by hiding their identities.

The Swiss government, wary of being branded a tax avoidance pariah, said on Wednesday it was launching a public consultation on measures to convert anonymous bearer shares in private firms into registered shares that have owners’ names attached. Long seen as a haven for the wealthy to stash their money, Switzerland has already dismantled banking secrecy by agreeing to send information about customers’ accounts to foreign tax agencies.

The new bearer share proposal, recommended by an Organisation for Economic Co-operation and Development (OECD) panel, aims to clamp down on tax avoidance by people using shell companies to hold bearer shares. As those shares have no name attached, ownership can be concealed and even transferred with no documentation. There are no estimates for how much tax income is lost this way.

A global crackdown on illegal tax avoidance has allowed tax authorities to recover more than $85bn over the past eight years, the OECD estimates.

The Swiss proposal would apply only to companies that are not publicly listed. It would not affect groups such as pharmaceutical company Roche or lift maker Schindler, which have used voting bearer shares to keep companies under the control of their founding families.

The proposed rules would carry financial penalties for companies that do not comply.

In 2015, Britain banned companies from issuing bearer shares and ordered companies that already had them to convert them into securities whose ownership could be documented. Singapore, Hong Kong, Belgium, Austria and the US have also passed laws restricting bearer shares in recent years.

An earlier Swiss attempt to tighten rules on bearer shares was judged inadequate by the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes. “If Switzerland does not follow the recommendation, it can expect to be labelled ‘nonconforming’ in this area,” according to a government report issued on Wednesday.

Switzerland said bearer shares had dwindled in recent years as firms converted them into registered shares. Bearer shares now represent 12% of the share capital of firms, down from 27% in 2014.