With stunning speed, offshore wealth centres ranging from Switzerland to Singapore have made concessions on banking secrecy – a principle which has long been targeted by the OECD group of nations determined to stamp out tax evasion.
The US led the attack, demanding UBS release the names of 47,000 Americans suspected of opening secret accounts to evade taxes. The new requirement followed UBS’s agreement last month to release client information on 250 US citizens and pay a $780 million fine as part of a settlement. Further pressure was heaped on the tax havens when the issue of blacklisting certain jurisdictions was placed on the agenda of the G20 summit due to be held in London on 2 April.
In rapid succession, Austria, Luxembourg and Belgium joined Switzerland, Hong Kong, Singapore and Monaco in a worldwide agreement to exchange tax information on request and subscribe to the OECD principles on the exchange of tax information.
Angel Gurría, OECD secretary general, said international pressure had sparked a “dramatic transformation in just a few days” in the drive to combat tax evasion.
Still, signs are there will be no sudden opening up of the whole offshore banking system, estimated to hold assets of about $7 trillion.
Progress could be slow
Swiss finance minister Hans Rudolf-Merz warned implementing changes to banking secrecy rules will not happen overnight, particularly as more than 70 double-tax treaties would have to be renegotiated. Michel Dérobert, secretary general of the Swiss Private Bankers Association, said Switzerland would not cave in completely to outside demands on transparency.
Finally, a US Treasury official has criticised a controversial list of 50 tax havens which could form the centrepiece for potential economic sanctions. Part of the list is included in the Levin Bill, now before both chambers of Congress, and which aims to place the burden of proof for tax avoidance on taxpayers.
• See No endgame despite concessions for full analysis