Tuesday, April 07, 2009

US, Switzerland To Begin Tax Treaty Negotiations

From The Associated Press:

The Treasury Department this month will begin revising a tax treaty with Switzerland, which has pledged to increase transparency and help crack down on tax evaders with money in Swiss banks.

The Swiss government opened the door for the talks last month after agreeing to cooperate with international tax investigations of wealthy foreigners accused of hiding billions of dollars in banks there. The move broke with a long-standing tradition of strict Swiss protections for individuals who use its banking system.

"We welcome moves by Switzerland to implement international standards by agreeing to revise the U.S.-Switzerland tax treaty," Treasury Secretary Timothy Geithner said Monday. "I look forward to swift conclusion of an agreement ... and I will continue to demand transparency from countries on behalf of American taxpayers."

The Treasury Department said negotiations between the two nations will begin April 28 in Berne, Switzerland.

The talks come as the Obama administration wants Swiss bank UBS AG to turn over information on thousands of U.S. customers who concealed their accounts from the government in violation of tax laws. UBS has formally accepted responsibility for helping Americans hide assets and agreed to pay $780 million in fines and restitution.

U.S. authorities in January charged Raoul Weil — a senior executive with UBS — with conspiring to hide $20 billion in assets from the IRS using secret overseas accounts. And a former UBS banker, Bradley Birkenfeld, pleaded guilty last year to fraud conspiracy charges in Fort Lauderdale, Fla. He has been cooperating extensively with U.S. investigators and has not yet been sentenced.

Swiss banks hold an estimated $2 trillion of foreign money, and financial services account for about 12 percent of the nation's economy. According to the Boston Consulting Group, those holdings amount to one-fourth of the world's foreign-owned assets.

The recent policy shift by the Swiss government allows it to demand bank account holders' identities in cases of suspected wrongdoing and share that information with foreign authorities.

World leaders meeting in London last week pledged to crack down on tax haven countries by imposing sanctions on the worst offenders, such as withholding financing from the International Monetary Fund or World Bank.

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