Swiss propose US tax truce

“Another nail in the coffin of tax secrecy,” headlines the Financial Times in its editorial following news that the Swiss Federal Council (government) proposed a new law on May 29 to allow banks to cooperate with the US to trace tax cheats. The bill aims to end to a long running battle between US tax authorities and Bern, which has already seen the closure of Wegelin, Switzerland’s oldest bank, after it admitted helping Americans avoid tax.

Existing Swiss laws forbid banks from providing data about clients. The new law would provide a one-year window in which banks would be allowed to provide tax investigators with internal documents. While this could avoid the pursuit of criminal charges against individuals, banks are still likely to be fined billions of dollars for aiding tax evasion. For the FT –

As far as it goes, the law is a good one. It helps remove the legal and reputational uncertainty that is hampering Swiss banks’ business in the US market, and it lets the US exact punishment and admission of guilt from those who have helped Americans cheat on their taxes.

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However, the economic daily points out that –

The law will suspend normal confidentiality rules for one year only. But the old and cosy world where too few questions were asked should not be allowed to survive.

Before the bill can become law, it must still be passed by the Swiss parliament. And there the "Lex USA," as it is dubbed in Switzerland, "is meeting strong resistance," reports Swiss daily Neue Züricher Zeitung, which warns on its front page that the "tax deal with the United States may be doomed to failure".

For the moment there is no majority in Parliament to support the Federal Council's action. The three main parliamentary groups reject the "Lex USA".

Geneva-based daily, Le Temps, for its part warns that –

the opacity that cloaks the peace agreement as well as the uncertainty over whether banks will be able to exercise their free will about entering or not the American past settlement programme does little to contribute to the legal and economic security desired by all sides.