UPDATE 1-G20 pushes tax data exchange, Swiss seen as laggards

Fri Apr 19, 2013 5:30pm EDT

By Kim Dixon

WASHINGTON, April 19 (Reuters) - The Group of 20 advanced and emerging economies on Friday endorsed automatic exchange of tax data among nations, calling it the expected new standard for how governments can help each other fight cross-border tax cheating.

A G20 communique, issued at the semi-annual meetings of the International Monetary Fund and the World Bank, was a small but meaningful step toward more transparency, tax justice advocates said.

"It is positive reinforcement and really the next step is the G20 members committing to pushing this," said Heather Lowe, counsel for Global Financial Integrity.

At a time of intensified scrutiny of tax dodgers, the G20 communique urged "all jurisdictions to move toward exchanging information automatically with their treaty partners."

Currently, only a small group of countries have signed tax treaties guaranteeing automatic exchange of tax information, as opposed to delivery upon specific request.

Earlier on Friday, 14 countries, including Switzerland, were singled out by the Paris-based Organisation for Economic Co-operation and Development (OECD) as laggards in making progress toward meeting new global standards for tax data exchange.

The United Arab Emirates and Panama were also among the 14 countries named as failing to meet the OECD's Phase 2 standard of international information exchange, according to the report by the OECD, which promotes cooperation among developed nations.

The G20 communique urged the 14 jurisdictions to comply. The other countries on the OECD's list were Botswana, Brunei, Dominica, Guatemala, Lebanon, Liberia, Marshall Islands, Nauru, Niue, Trinidad and Tobago and Vanuatu.

SOME PROGRESS MADE -OECD

"Significant progress has been made ... but significant progress remains to be made," Pascal Saint-Amans, director of OECD's Centre for Tax Policy, told reporters.

"Switzerland for the time being is stuck," he said, acknowledging that Switzerland has made progress, but is not done yet with changing its ways, Saint-Amans said.

The Swiss often complain they are unfairly singled out in the global discussion about tax avoidance. Swiss Finance Minister Eveline Widmer-Schlumpf told reporters at the meetings: "We are ready to take part in discussions under the condition that it is not just a European standard but a global" one.

Tax evasion has dominated European headlines in recent weeks, following the admission by a disgraced former French minister that he held a Swiss account and the recent leak of thousands of holders of secret bank accounts worldwide.

Earlier this week, sources told Reuters that Swiss and U.S. governments were weighing a possible solution to end their long-standing dispute over Swiss banks accused of helping wealthy Americans evade billions of dollars in taxes.

A historical bastion of banking secrecy, Switzerland has been under fire for several years for turning a blind eye to the sheltering of taxable income by its banking sector.

UBS AG, Switzerland's largest bank, paid $780 million in 2009 and handed over thousands of client names to settle U.S. charges that it helped U.S. citizens hide funds.

OECD DISCONNECT?

Formed after World War Two to promote cooperation and reconstruction, the OECD can urge change on its 34 member nations, but it is up to individual governments to carry it out.

The OECD's Global Forum on Transparency and Exchange of Information has completed reviews of 100 countries so far.

James Henry, a lawyer and economist who consults for the Tax Justice Network, an advocacy group often critical of the pace of rich countries' enforcement of tax laws, said the OECD's narrow focus on tiny, largely poorer countries misses the big picture.

"Many havens on this list are conduits to other places  the actual money ends up being invested in places like the United States and Switzerland," he said.