OECD Supports Swiss Tax Transparency Advances
The Organisation for Economic Cooperation and Development (OECD) has welcomed Switzerland’s recent moves towards greater tax transparency, admitting the country to phase 2 of the peer review process.
Jacques de Watteville, head of Switzerland’s State Secretariat for International Financial Matters, said: “We are delighted about this decision. It is the result of intensive work on Switzerland’s part, which is committed to a competitive financial center that complies with international standards.”
Switzerland has been removed from the category of jurisdictions blocked from moving forward in the peer review process. The Global Forum on Transparency and Exchange of Information for Tax Purposes conducts peer reviews in two phases. In phase 1, analysts check whether the necessary legal foundations are in place for the exchange of information in accordance with the international standard. Phase 2 examines the processes in place to exchange information in practice.
Phase 2 should begin for Switzerland in autumn 2015, with a report due in the second half of 2016. “We are on the right track and want to pursue the efforts towards a morally sound and competitive financial center,” de Watteville said.
The report on Switzerland’s phase 1 peer review was published in June 2011, when the Global Forum concluded that improvements were needed. In June 2014, Switzerland requested a supplementary report to assess the progress made since the original review. Further changes to Switzerland’s Tax Administrative Act (TAAA) entered into force on August 1, 2014. These amendments provided for an exemption regarding the prior notification of individuals affected by an administrative assistance request. In certain cases, the affected taxpayers can now be informed only after their data has been transferred to requesting foreign authorities, rather than in advance.
Switzerland currently has signed 57 OECD standard-compliant double taxation agreements (DTAs) and tax information exchange agreements (TIEAs). In October 2013, Switzerland signed the OECD/Council of Europe Convention on Mutual Assistance in Tax Matters, and, in December 2014, the Swiss Parliament approved legislation for implementing new rules on money laundering and terrorist financing, which will improve transparency in the case of bearer shares.
In its supplementary report, the OECD recommended that Switzerland ensure that TIEAs negotiated prior to March 13, 2009, allow for the exchange of information in line with the international standard and that it continue to develop its TIEA network. The Government should make certain that appropriate mechanisms are in place to identify owners of bearer shares in all instances, the OECD said, and ensure that ownership and identity information is available in the case of permanent establishments.
