Swiss banks refuse blame for foreign clients' tax evasion

6th May 2008, Comments 0 comments

Top banking official says that governments who are experiencing a lot of tax evasion from their citizens should rethink their tax system.

6 May 2008

GENEVA - Swiss banks cannot be expected to police foreign clients' tax affairs, one of the country's top banking officials said Monday, rejecting German demands for greater cooperation to catch tax evaders.

The president of the Swiss Bankers Association laid the blame for tax evasion squarely at the feet of governments that demand too much of their citizens' income.

"Countries which worry about tax evasion of their citizens should have a good think about the way they tax their people," Pierre Mirabaud told journalists in Geneva.

The European Union, in particular Germany, has been pressuring Switzerland to crack down on EU citizens who hide money in Swiss banks in order to avoid paying higher taxes at home.

Switzerland, which is not a member of the 27-nation bloc, fiercely protects the privacy of banking customers, including foreigners who have deposited more than CHF 1 trillion Swiss in its vaults.

"It's necessary to clearly show Germany and the European Union where their sphere of influence ends and where our sovereignty begins," Mirabaud said, adding that his members don't regard themselves as responsible for their clients' actions.

"We are not a tax authority and we are not a police authority," he said.

Leading Swiss politicians and bankers reacted with outrage earlier this year when it was revealed that German intelligence had purchased confidential information on bank customers in neighbouring Liechtenstein.

Mirabaud said at the time that Berlin had used "Gestapo" methods to acquire the data, but later retracted his comparison to Nazi Germany's secret police.

The information led to a series of high-profile raids against individuals and businesses in Germany, as well as further investigations by authorities in Britain, France, Italy, Spain, Canada, the United States, Australia and New Zealand.

Switzerland, like Liechtenstein, provides no judicial assistance to foreign authorities in cases of tax evasion because it is considered an administrative offence subject only to fines rather than a crime punishable by a jail sentence.

A visit last week by German chancellor Angela Merkel to discuss the tax issue failed to change Switzerland's stance on the matter.

Mirabaud said criticism of Switzerland was misplaced, and largely driven by competitors jealous of the Alpine nation's success as a leading centre for international finance.

"For any Anglo-Saxon newspaper, it's much easier to attack Switzerland than the United Kingdom or the U.S.," he said.

Mirabaud insisted that Switzerland has some of the world's strictest rules against money laundering and has done much in recent years to shake off its reputation as a safe haven for dictators to stash their funds.

Millions of dollars hidden in Swiss accounts by the late Nigerian dictator Sani Abacha and Philippines strong man Ferdinand Marcos have been returned to their governments.

Swiss authorities are seeking to do the same for money deposited here by former Haitian dictator Jean-Claude "Baby Doc" Duvalier.

But on the matter of tax evasion, Mirabaud said the solution is for countries to demand less from their citizens.

"Humans being what they are, if the tax burden becomes too high there will always be tax evasion," he said.

[AP / Expatica]

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