Switzerland to sign G20's tax evasion cooperation agreement

The country's Federal Council agreed to sign the convention this week, although it will not ratify its participation until it has been approved by the Swiss parliament and potentially put to a referendum. Switzerland has been criticised by international policy body the Organisation for Economic Co-ordination and Development (OECD) for the secrecy of its banks.

"Switzerland has been committed to complying with international standards in tax matters since March 2009," the Federal Council said in a statement. "The signing of the OECD/Council of Europe convention underscores Switzerland's willingness to conform to these standards. It also 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."

The Federal Council has also adopted a draft mandate which, when approved by the country's parliament, will allow it negotiate a revised agreement on the taxation of savings with the EU. The EU intends to renegotiate its agreements with non-member countries ahead of its planned revision of the Savings Directive.

The Convention on Mutual Administrative Assistance in Tax Matters was developed jointly by the OECD and the Council of Europe in 1988. In 2009, the agreement was updated to bring it into line with international standards on the exchange of information for tax purposes, and to open it for signature to countries that are not members of the OECD or the Council of Europe. More than 50 countries have either become signatories or have stated their intention to do so since the convention was amended, with China becoming the last of the G20 leading global economies to do so this summer.

The amended convention (17-page / 453KB PDF) is intended to facilitate international co-operation in relation to the application of national tax laws, while still respecting the fundamental rights of taxpayers. It allows for all possible forms of administrative co-operation between states, ranging from the automatic exchange of information to the recovery of foreign tax claims.

The G20 countries are pushing for the automatic exchange of tax information between countries to become the global standard; however, such arrangements currently have to be entered into separately. In its announcement, the Federal Council made it clear that automatic exchange was "one of the options foreseen in the convention", but that this would "expressly require an additional agreement between the states involved.

Last month, HM Revenue and Customs (HMRC) began sending letters to around 6,500 UK taxpayers who hold Swiss bank accounts. The letters have been issued as part of an agreement between Switzerland and the UK in relation to undeclared Swiss bank accounts held by UK residents. They give the holders of these accounts six weeks to ensure compliance with UK tax laws, and advise those with irregularities to consider using the Liechtenstein Disclosure Facility to settle their tax affairs.