The Swiss government is digging in its heels over the long tug-of-war between the IRS and the country's largest bank, UBS, reports the New York Times. The government is now threatening to seize the records of clients demanded by the IRS, rather than let the bank turn them over. UBS has already admitted to promoting tax fraud among its US clients and turned over records on 250 clients. However, despite a recent agreement by Switzerland with the Organization for Economic Cooperation and Development (OECD) that it would turn over information in tax evasion cases, the country has returned to its bogus distinction between tax fraud (criminal matter) and tax evasion (civil matter only) and would appear to be reneging on its commitment in this case.

In the article, the OECD notes that Luxembourg (like Switzerland, an OECD member with a bank secrecy/tax haven tradition) has gone a long way in actually complying with the new information exchange standard. If Luxembourg indeed caves, Switzerland is going to be very isolated, under pressure from the EU, US, and OECD.

Although the article doesn't mention it, we should not forget that the US is a guilty party on information exchange, too, most notably in Delaware, where it is still possible to incorporate without divulging the name of the actual owners of a company. We've got to lead by example! I'm sure we'll hear the Swiss bring it up before long.


http://www.nytimes.com/2009/07/09/business/global/09ubs.html?_r=2