Though Switzerland signed agreements with the US, UK, and Germany this year, agreeing to disclose tax evaders with offshore accounts, a new ranking of tax haven countries still says its banks are the top destination for financial secrecy.
Tax Collection “Ineffective”
The nonprofit organization Tax Justice Network released the report on Monday which ranked Switzerland as the top tax haven. They said that while Switerzland has reluctantly agreed to disclosure with developed countries, they still curry favour with tax evaders in developing countries.
As part of a program with the Organisation for Economic Co-Operation and Development, Switzerland agreed to share information about accounts evading tax, but Monday’s report calls these tax collection efforts “ineffective.”
The report said that Switzerland continues its “widespread involvement in the administration and use of trusts, foundations, and offshore companies.”
This “remains a major barrier to tackling tax evasion and illicit financial flows,” it added.
U.S. Tax Hunt
Still, U.S. tax authorities continue to press the Swiss for account information, though it ranked fifth on the report of most secretive countries. The top four were Switzerland, the Cayman Islands, Luxembourg, and Hong Kong.
The Tax Justice Network report found that the US allows foreign citizens to earn income from property and not report it to their native countries.
The report said of the effect of US financial opacity policies: “Financial secrecy provided by the U.S. has caused untold damage to the ordinary citizens of foreign countries, whose elites have used the U.S. as a bolt-hole for looted wealth.”
Despite this, the US continues to be on the hunt for tax evaders, as a Senate investigation found that the country loses $100 billion each year in taxes, just from offshore assets.
In 2009, UBS AG paid $780 million in settlements for Justice Department investigation, and the Credit Suisse Group AG is currently under grand jury investigation.