Switzerland, Austria to ease banking secrecy, share data

March 13th, 2009 - 8:00 pm ICT by IANS  

Bern/Vienna, March 13 (DPA) Switzerland, Austria and Luxembourg said Friday they would relax their banking secrecy rules, exchange tax data with foreign regulators, and better comply with international standards on tax evasion probes.
Switzerland would accept the standards of the Organisation for Economic Cooperation and Development on administrative assistance on tax matters, said a statement on the finance ministry’s website.

Austrian Finance Minister Josef Proell told reporters in Vienna that national banks will exchange tax data about accounts held there with foreign regulators, but only in cases where there were grounds for suspicion.

Opening data about an account will require strong documentation from a foreign regulator, said Proell, announcing the relaxation of the rules. Until now, such access has only been provided in cases where there was an ongoing investigation.

A similar announcement was made by Luxembourg’s ministry of treasury and budget, which said it would exchange data in cases of explicit proof.

The countries have been under pressure to change their regulations, particularly amid concerns that the issue of tax havens would feature prominently at an international economic summit in London next month.

The Swiss statement said Bern, on a case by case basis, would exchange information on requests of other countries. It noted the increased globalization of financial markets and said sharing data had become extremely important.

Exchanges of information, however, would only take place following modifications to existing taxation agreements and negotiations on those charters would be handled bilaterally with other nations.

Furthermore, the setup would preclude any so-called “fishing expeditions,” meaning there would have to be proof of a tax offence for the Swiss to divulge client data.

While banking secrecy was not intended to protect perpetrators of criminal tax offences, the privacy laws would remain intact, the Swiss ministry stressed.

The Austrian minister also said his country’s secrecy laws would not be changed and only the taxation agreements would be amended.

Until now, Switzerland has maintained a distinction between tax evasion and tax fraud, where only the latter was a criminal offence which warranted lifting banking secrecy.

The three countries had met earlier this week and pledged to protect banking secrecy.

Liechtenstein and Andorra, both deemed uncooperative tax havens announced similar plans Thursday. Liechtenstein’s prime minister said he expected his small principality to eventually be removed from the list of tax havens in light of the move.

Swiss banking secrecy has been making headlines since it was announced last month that the country’s largest bank, UBS, handed over data on close to 300 clients to United States authorities as part of a settlement to a tax fraud investigation. The move was directed by the Swiss regulatory body, Finma.

The bank also paid $780 million in fines and admitted to wrongdoings by employees.

UBS has so far refused another US demand that it hand over data on 52,000 clients, saying that would violate Swiss law.

In recent weeks the Swiss government has implied it would be willing to negotiate changes to its bilateral taxation agreements with other countries, with the implication that the change relate to the distinction between types of tax offences.

Ministers have emphasized the importance of maintaining privacy in banking. Some bankers have expressed concern for the Swiss financial sector if secrecy rules were eroded, saying it could lead to drops in GDP of up to 6 percent.

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