This week, governments around the world continued to turn up the heat on taxpayers who hide their income in offshore tax havens, as fallout from the settlement between the U.S. government and the Swiss mega-bank UBS continued.
Tax haven issues were prominent at the Organization for Economic Cooperation and Development (OECD) meeting earlier this week in Mexico City. The OECD has a monitoring program tasked with addressing offshore tax abuses, and its president-elect suggested a "system of sanctions" may be implemented against countries not living up to certain accepted standards for the exchange of tax information to catch tax evaders.
At the meeting, the Mexican finance minister urged the 70 delegations at the OECD meeting to look at other methods of tax evasion besides bank secrecy. For example, he noted that corporate dividends often escape taxation. He urged the representatives to include money laundering and other opaque financial practices in their investigations, especially in developing countries.
Countries that want to at least put some effort into preventing offshore tax evasion continue to sign tax information exchange agreements (TIEAs) with each other. Several new agreements were signed on the first day of the conference. Also that day, Austria, a long-time defender of bank secrecy, passed legislation allowing it to implement the new global tax standards after the European Investment Bank threatened to withdraw loans to Austria if it did not reform its bank secrecy laws.
In Switzerland last week, the government formally approved six of the 13 TIEAs that have been drafted with other countries. The agreement initialed with the U.S. in June was not approved, possibly because of the ongoing U.S. investigation of Swiss banking giant UBS.
UBS, the Swiss government, and the U.S. government reached agreements in the UBS case last month which anticipate that UBS will turn over approximately 4,450 names of account holders to the U.S. government. The U.S. government made its first formal request under the agreements and the first 500 names are to be provided within 90 days. The Connecticut attorney general has written Treasury and the IRS requesting that the names be provided to the state when they are received from the Swiss government so that his office can investigate whether state income taxes have also been evaded.
Noting the US/UBS agreement, last week a European Commission official stated that European Union members would expect the same cooperation from the Swiss. This week, the French minister of budget announced that the French government had compiled a list of 3,000 French-held Swiss bank accounts from audits and information provided by French banks on money transfers to tax havens. "Some are certainly tax evaders," he said.