Financial Transparency Coalition

From Bruno Gurtner, guest editor.

Tax Justice Focus, Volume 6, Number 2 – The SWITZERLAND edition.
October 5th, 2010

The Switzerland edition – click here

The latest edition of Tax Justice Focus explores the changing face of tax haven Switzerland. Historically one of the world’s most important secrecy jurisdictions, Switzerland – along with its financial services sector – has recently been buffetted by a series of scandals and pressures. These range from a giant tax evasion probe in the United States targetting the Swiss bank UBS, to massive damage to the banks from the latest financial crisis, to renewed anger about tax evasion and avoidance facilitated by Switzerland, as governments around the world – especially in Europe – seek to secure fiscal revenues amid an economic downturn.

In this edition, guest editor Bruno Gurtner and his selected contributors explore the ways in which Switzerland has responded to the pressures, and find that while the country has taken some welcome steps towards transparency, there remains a very, very long way to go – and those limited positive changes that have taken place have generally seen developing countries left out of the picture.
In the lead article, Mark Herkenrath of Alliance Sud looks at Switzerland’s new double tax agreements, and finds that developing countries have avoided signing new ones with Switzerland because it is insisting that in order to get access to better forms of information exchange, developing countries must make concessions in other areas of international tax.

In his editorial, TJN’s Bruno Gurtner then explores Switzerland’s history of circling the wagons in defence of its banking secrecy. As he explains, concessions have been made, but the Swiss have now retreated to new defensive positions, and it still remains extremely difficult for foreign jurisdictions to get information out of Switzerland.

This is followed by a contribution from the historian Peter Hablützel, a former senior Finance Ministry official, who explores how Switzerland’s big financial institutions have effectively captured the Swiss state, with serious consequences for its democratic system. The financial crisis, he continues, has also undermined old certainties about the role of banking in Switzerland.

Next, Thomas Cottier, a leading Swiss expert in economic law, describes a serious tax dispute between Switzerland and the European Union, and advises that Switzerland ought to accept the EU Code of Conduct for business taxation as a basis for the future taxation of companies.

A few days before this edition was published the Swiss parliament adopted a new Law for the Restitution of Illegal Assets (LRAI), an innovative legal mechanism that places the burden of proof on the account holder. However, the law contains serious shortcomings. Olivier Longchamp of the Berne Declaration explores this law, in the wider context of Switzerland’s long historical relationship with the world’s kleptocrats and dictators.

This is followed by a feature article by Daniel Thelesklaf of Transparency International Switzerland, who explores Switzerland’s anti-money laundering act (AMLA.) As he explains, Switzerland, once a trailblazer in this area, is now following in midfield. He cautions against the tendency of many in Switzerland to bask in an outdated best-in-class myth.

Andreas Missbach of the Berne Declaration rounds off the features section of this edition of Tax Justice Focus, looking at the UBS case and other areas where Switzerland has had to retreat in the face of multiple external attacks and pressures on its banking secrecy. He explains how other countries are unlikely to accept some of the defensive positions Switzerland has now adopted.

This edition also contains a review of a new book entitled Tax Havens: How Globalization Really Works, plus a brief mention of TJN’s new transfer pricing project, an overview of the recent Yaoundé Declaration on Tax and Development, and a brief overview of a forthcoming meeting of the UN Tax Committee.

Tax Justice Focus is the newsletter of the Tax Justice Network. Older editions can be found here. We would like to give our special thanks to Alliance Sud and the Berne Declaration for their generous support of this edition of Tax Justice Focus.