Spotlight on the Hypocrites
Published in Neue Zürcher Zeitung
(Switzerland) on 7 September 2016
by Hansueli Schöchli (link to original)
(Switzerland) on 7 September 2016
by Hansueli Schöchli (link to original)
Translated from
by LeAnn Kearney.
Edited by Helaine Schweitzer.
The U.S. enjoys a privilege with respect to international rules for tax transparency. The Swiss Federal Council now wants to take action against that.*
Preaching water and drinking wine is a beloved sport—for people as well as states. The powerful are especially good at this, since they can most easily afford such behavior. The great power, the United States, demonstrates this in various areas. In Switzerland, this is especially apparent in the topic of tax transparency. The U.S. demands a vast amount of data from foreign countries, but was until now unprepared to deliver the same amount of data. So with certain corporate structures, the U.S. does not disclose the names of corporate owners who receive the benefit from corporations, which has further strengthened the status of the U.S. as a stronghold for unreported wealth.
This discrepancy is also the case for the “mutual” FATCA agreement**, which the U.S. forced onto other countries and which obligates them to deliver financial data about taxpayers. Also in the Organization for Economic Co-operation and Development standard for the automatic exchange of information about financial customers known as AEOI, the U.S. was allowed an exemption from the obligation to identify corporate owners.
In spite of that, this spring the Swiss Federal Council described the U.S. as a “participating state” in the AEOI in its draft regulation for the AEOI ordinance. Financial institutions will have lower due diligence obligations with professionally managed investment companies from AEOI states. However, the U.S. will now be dropped from the Swiss definition of AEOI states, as the Swiss television reported and the government confirmed. The declared reason: Other important countries also view the U.S. as a non-AEOI state, and because of this, Swiss financial institutions will not have any competitive disadvantage on this point. It is pleasing that many countries are shining a spotlight on the hypocritical United States. The great power is slowly moving in the direction of tax transparency. But whether it will soon only drink water instead of wine is another question.
*Editor’s note: The Federal Council is the seven-member executive council which constitutes the federal government of Switzerland and serves as the collective executive head of government and state of Switzerland.
**Editor's Note: FATCA stands for the Foreign Tax Compliance Act which became law in March 2010.
Preaching water and drinking wine is a beloved sport—for people as well as states. The powerful are especially good at this, since they can most easily afford such behavior. The great power, the United States, demonstrates this in various areas. In Switzerland, this is especially apparent in the topic of tax transparency. The U.S. demands a vast amount of data from foreign countries, but was until now unprepared to deliver the same amount of data. So with certain corporate structures, the U.S. does not disclose the names of corporate owners who receive the benefit from corporations, which has further strengthened the status of the U.S. as a stronghold for unreported wealth.
This discrepancy is also the case for the “mutual” FATCA agreement**, which the U.S. forced onto other countries and which obligates them to deliver financial data about taxpayers. Also in the Organization for Economic Co-operation and Development standard for the automatic exchange of information about financial customers known as AEOI, the U.S. was allowed an exemption from the obligation to identify corporate owners.
In spite of that, this spring the Swiss Federal Council described the U.S. as a “participating state” in the AEOI in its draft regulation for the AEOI ordinance. Financial institutions will have lower due diligence obligations with professionally managed investment companies from AEOI states. However, the U.S. will now be dropped from the Swiss definition of AEOI states, as the Swiss television reported and the government confirmed. The declared reason: Other important countries also view the U.S. as a non-AEOI state, and because of this, Swiss financial institutions will not have any competitive disadvantage on this point. It is pleasing that many countries are shining a spotlight on the hypocritical United States. The great power is slowly moving in the direction of tax transparency. But whether it will soon only drink water instead of wine is another question.
*Editor’s note: The Federal Council is the seven-member executive council which constitutes the federal government of Switzerland and serves as the collective executive head of government and state of Switzerland.
**Editor's Note: FATCA stands for the Foreign Tax Compliance Act which became law in March 2010.
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