adminGENEVA. — Switzerland is racing to end a bitter dispute with Washington over Swiss bank accounts held by US tax dodgers, but observers warn the new-found peace could come at a high cost.
The Lower House of the Swiss parliament voted on Monday in favour of a law that will require Swiss banks to report the holdings of their current and future American clients to US tax authorities.
The approval of the US Foreign Account Tax Compliance Act, which aims to block Americans from hiding money from the taxman in Swiss accounts going forward, comes just over a week after the Swiss government agreed to a separate deal to help the country’s banks make amends for past wrongdoings.
Swiss banks are believed to have accepted tens of billions of undeclared dollars from US citizens, though they now refuse such money, and Bern insists both recent deals are needed to end a dispute that has poisoned relations between the two countries for years.
Critics, however, warn that the deal aimed at settling past wrongs, which comes with stiff fines attached, could prove deadly for many Swiss banks.
“It’s devastating for Switzerland’s financial industry,” said business lawyer Douglas Hornung, warning that even bigger penalties could be lurking around the corner if European tax authorities decide to follow in Washington’s footsteps.
The deal offers individual Swiss banks the opportunity to avoid US prosecution if they agree to hand over information on US citizens’ accounts and to pay an “appropriate” fine —assessed at 20-50 percent of the value of undeclared accounts, depending on the time they were opened. — AFP.
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