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Switzerland breaks with tradition on tax evasion

March 14, 2009|Associated Press

GENEVA — Switzerland's days as a haven for the world's tax evaders may be numbered.

Under pressure from the United States and other troubled economies, the Swiss government announced Friday that it would cooperate in international tax investigations, breaking with a long-standing tradition of protecting wealthy foreigners accused of hiding billions of dollars. Austria and Luxembourg also said they would help.

"Against the background of the financial crisis, international cooperation has grown stronger particularly against tax crimes," Swiss President Hans-Rudolf Merz said.

But he insisted that the secrecy of Swiss banks would remain intact except when other countries provide compelling evidence of tax evasion.

The decision was a hard one for the Swiss, whose renowned discretion has long attracted famous foreigners as well as refugees from political or religious persecution.

Swiss banks hold an estimated $2 trillion of foreign money, and financial services account for about 12% of the country's gross domestic product. According to Boston Consulting Group, those holdings amount to one-fourth of the world's foreign-owned assets.

The famed "numbered accounts" that do not bear the owner's name will still be available for clients willing to pay for added anonymity. But the government will now be able to demand account holders' identities in cases of suspected wrongdoing and share that information with foreign authorities.

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