More than a dozen Swiss banks will have to pay billions of dollars in fines for helping their American taxes.
The US Justice Department is stepping up pressure on 14 Swiss banks despite an agreement to end banking secrecy and sign up for the Foreign Account Tax Compliance Act (FATCA).
The latest to fall into the line of fire is Rahn & Bodmer, Zurich’s oldest bank – which came into the frame after a US client cited tax advice from the bank while volunteering disclosure of hidden offshore assets.
The problem for the banks is the new pact between the USA and Switzerland for banking transparency does not cover banks involved in tax evasion that opted not to disclose the facts before the agreement came into force.
Other big names awaiting attention from the US are Credit Suisse and HSBC.
Stronger relations
“We are ready to come to a resolution with the US government,” Rahn said. “Our personal and financial resources are ready.”
Meanwhile, the US authorities have warned banks in Switzerland and elsewhere to come forward and disclose any involvement in tax evasion.
“This agreement with the Swiss will allow us to aggressively pursue taxpayers who hide their assets overseas,” said US Attorney General Eric Holder.
“The agreement not only strengthens our relationship with the Swiss but calls on banks, financial advisers and taxpayers to put their affairs in order because we are coming after them.”
Holder also set out a marker for corporations avoiding tax following the G20 summit in Moscow.
Banking secrecy
“The G20 is leading the way in implementing a more effective international tax system after declaring the end of bank secrecy,” he said.
“Making stronger tax ties between governments is crucial and over the next two years, the tax regime for companies worldwide will change as governments roll pout this program.
The Organisation for Economic Co-Operation and Development (OECD) explained that FATCA and other tax treaties marks the end of multinational corporations for base erosion and profit shifting – the practice of moving money around the world to places with little or no corporation tax.
“Many international tax rules date back to the 1920s,” said a spokesman. “The old rules were aimed at making sure corporations did not pay tax on the same profits in two countries.
“Now the focus will be making sure they pay tax in the money where the profit is made, and not opting to shift the cash to somewhere with lower taxes.”
