Swiss tax amnesty under fire from dissenters

Swiss dissenters are trying to torpedo agreements that guarantee taxes worth billions are withheld from undeclared accounts held by the nation’s secretive banks.

The three agreements – with the UK, Germany and Austria – aim at legalising undeclared, untaxed cash and other assets held by wealthy foreigners in Swiss banks.

Meanwhile, tax investigators in each country are looking at lists of account holders with holdings in the banks to make sure they take advantage of a tax amnesty.

Those who do not own up and pay fines and penalties can expect to face tougher tax inquiries and even criminal prosecution.

The account holder lists were sold to tax authorities by whistleblowers working for HSBC and Credit Suisse banks.

Pirmin Schwander, who heads a political group campaigning for an independent and neutral Switzerland has pledged to try to block the tax agreements by calling a referendum.

To gain the vote, the group has to collect 50,000 signatures on a petition by October.

Schwander’s group argues the agreements contravene tax laws in each country, which state tax is paid on moveable assets in the taxpayer’s home country – not overseas.

“No country in the world collects money for an overseas state,” he said. “The fact that Switzerland has negotiated different terms with different countries will lead to chaos, controversy, discrimination, and legal uncertainty.”

However, the impending US Foreign Account Tax Compliance Act (FATCA), which starts in January 2013, obliges foreign financial institutions to withhold taxes on any assets they hold for US taxpayers.

FATCA and the tax agreements herald a shift in tax enforcement, as countries work towards sharing financial information about non-residents and withhold tax for each other.

The strategy has evolved from an accord between the world’s leading 34 economies who belong to the Organisation of Economic Cooperation and Development (OECD).

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