Switzerland Reaches Agreement With OECD Over Tax Questions
by Ulrika Lomas, Tax-News.com, Brussels
30 January 2004

Switzerland and the Organisation for Economic Co-operation and Development reached a long-awaited compromise deal earlier this week over certain Swiss tax practices deemed harmful by the OECD.

Following two days of discussions with the Paris-based organisation’s fiscal affairs committee, Swiss officials agreed to exchange information with other countries on Swiss holding companies, one of a number of issues that has dogged the relationship between Switzerland and the OECD in recent years.

Speaking to Swissinfo on the outcome of the talks, Wilhelm Jaggi, Switzerland's ambassador to the OECD, stated that the agreement represents a “good and balanced solution for all sides." However, he was keen to emphasise that the issue remains entirely separate from the more delicate matter of banking confidentiality, which he told Swissinfo remains non-negotiable.

The two parties also managed to resolve another sticking point involving the issue of administrative notes on how taxable profits are defined by firms.

Nevertheless, a third tax issue concerned with the method by which commercial expenses are deducted from tax statements remains unresolved.

Further agreement was reached, however, in the area of transfer-pricing, and the Swiss authorities have agreed to warn domestic firms to abide by OECD guidelines when transferring profits to subsidiary companies.

It has also emerged that the OECD is to undertake further analysis of the tax regimes under which Swiss finance and leasing companies operate.

A comprehensive report on the OECD, FATF and other 'offshore' initiatives, including the EU's Savings Tax Directive, is available in the Tax News Reports Shop at http://www.tax-news.com/reportshop