End of the Swiss Banking Tax Haven
Is this the end of the Swiss Banking Tax Haven?
Swiss Bank in Berne
The term Tax Haven over the past several decades has come to mean sheltering your income from the taxes of the country in which you live. But, there is a caveat where the cash is not actually in your hands, but in the hands of another entity or jursdiction.
This was once the domain and playground of the super wealthy. But as years went by, more players got invovlved and many other small countries also started playing the game. The tax hungry countries from the overtaxed citizens also decided to get into the game. What was forseen was a total erosion of the tax base. And that’s the result of the very harsh and threatening G20 with the OECD spear heading the assault on all these tax havens. Recently, even the giant financial centres have become targets and have been forced to knuckle under the big bully might of the G20.
The biggest bust of all to force the Swiss to back off on their sovereign banking secrecy came when busted UBS in the US. Now, with the new tax treaty, U.S. tax authorities will be able to request information on Americans suspected of concealing Swiss bank accounts, the Swiss Finance Ministry said.
The treaty forbids so-called ‘fishing expeditions,’ meaning U.S. authorities have to provide specific details on the person they are seeking further information about and can’t simply ask for wholesale lists of Americans with Swiss accounts, the ministry said.
Since March, Switzerland has signed 11 tax information exchange agreements, one short of the number required by OECD for it to be removed from a ‘gray list’ of uncooperative tax havens.
Here are what have been happening related to the Swiss UBS fallout.
* Switzerland has also signed agreements with Denmark, Luxembourg, France, Norway, Austria, Britain, Mexico, Finland, Faeroe Islands and Spain and the government has authorized the signing of a 12th with Qatar…according to the OECD guidelines…read more.
* Robert McKenzie says one of his clients told him he forgot he had $32 million stashed in a foreign bank account. While it may seem preposterous to lose track of that much money, the client is now coming forward to declare the cash to the Internal Revenue Service…read more.
* Chen (the former Taiwanese President)was sentenced to life in prison by the Taipei District Court earlier this month after being found guilty of embezzling $3.15 million during his 2000-08 presidency from a special presidential fund, receiving bribes worth at least $9 million, and laundering some of the money through Swiss bank accounts…read more.
* Toronto — Thirty-six Canadian clients of Swiss bank UBS have come forward to disclose unpaid taxes, and investigations so far have found $7-million in unreported income, the Canada Revenue Agency said Thursday. The voluntary disclosures follow a high-profile investigation of UBS in the United States, where the bank admitted to using Switzerland’s bank secrecy laws to help wealthy Americans evade taxes…read more.
Really the End of Tax Havens?
Is this the total meltdown of tax havens and offshore banking? The tax haven as being practiced for decades is dead…that’s true. But I for one am of the opinion that it has just morphed to become a very different animal. There will be geniuses of finance who will always find ways around such issues. So, perhaps instead of tax havens, perhaps they will be called offshore banking and private banking wealth management instead.
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With a large U.S. brokerage and investment banking business, UBS was extraordinarily reckless. These actions, knowledge of which seemed to go quite high if not to the top of the bank, put all of these activities in danger. “It is apparent that as an organization we made mistakes and that our control systems were inadequate,” CEO Marcel Rohner said in a statement.