OECD Backs Off Swiss Harmful Tax Listing

by Ulrika Lomas, Tax-News.com, Brussels

15 June 2005

After fierce resistance from the Swiss against the country's planned inclusion on the OECD's 'Harmful Tax' listing due out in July, the OECD has backed off and Switzerland has promised to improve its tax information-sharing rules.

International offshore financial centres which were included on the OECD's original list of countries with 'Harmful Tax Practices' frequently complained that the OECD was simply pursuing a campaign to defend the tax bases of its own members, and that many of those members had tax practices which were just as harmful as the offshore ones.

This year the OECD threatened to blacklist Switzerland because of its benign holding company regime that has encouraged numbers of major international companies to base themselves in one of the cantons which operate the best regimes.

Finance Ministry spokesman Daniel Eckmann told Swissinfo that the forum was unfairly targeting Switzerland. “We have big difficulties understanding how after five years of discussions about what should be considered a harmful tax practice, the forum comes up with a report that considers Switzerland the only country in the whole OECD with harmful aspects in its tax legislation,” Eckmann said.

The Swiss government has apparently promised to review the arrangements it has with other OECD countries to exchange information on the taxation of international companies.

Wilhelm Jaggi, Switzerland's ambassador to the OECD, told Swissinfo: "We agreed to negotiate in the framework of our bilateral tax treaties [for new] provisions for an effective administrative exchange of information for holding companies." He added: "It's certainly a good result that we could get rid of this irritant between Switzerland and the majority of other OECD members."

OECD spokesman Nicholas Bray told swissinfo: "This is not a victory for the Swiss. This is a work in progress. It is not Switzerland bashing the OECD, or the OECD bashing Switzerland."

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