Swiss banks end secrecy

It is a well-known truth that many wealthy individuals stash their extra cash in Swiss banks to evade tax. The latest development is not going to benefit many countries that can obtain a list of high net worth individuals who have accounts in Swiss banks

The Multilateral Convention on Mutual Administrative Assistance in Tax Matters

Switzerland became the 58th country in the world to sign the Multilateral Convention on Mutual Administrative Assistance in Tax Matters at the Organisation for Economic Co-operation and Development (OECD) in Paris.

The Swiss Federal Council approved the treaty on October 9. This major step means that Switzerland will be breaking its own time-tested laws on banking secrecy.

The Multilateral Convention provides for all forms of mutual assistance in the form of exchange on request, spontaneous tax examinations abroad, simultaneous tax examinations and assistance in tax collection, while protecting taxpayers’ rights.

Banking secrecy

Banking secrecy became entrenched in the Swiss law in 1934. For over 300 years, Swiss banks had a code of secrecy that forbids the disclosure of banking and account holders without their consent. The exceptions are drug trafficking, organised crime and insider trading. Thus Switzerland earned the reputation of being the world’s biggest tax haven for funds, which ensured confidentiality.

Swiss banks were under tremendous international pressure to cooperative with authorities to share information on accounts in Swiss banks. Several whistleblowers’ had exposed details of money laundering and tax evasion.

Switzerland’s Ambassador to the OECD Stefan Flückiger said: “Switzerland has been committed to complying with international standards in tax matters since March 2009. The signing of the Convention confirms Switzerland’s commitment to the global fight against tax fraud and tax evasion with a view to safeguarding the integrity and reputation of the country’s financial centre.”

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