SBA President Advocates Withholding Tax As Alternative To Disclosure

by Ulrika Lomas, Tax-News.com, Brussels

07 January 2010

In a bid to retain an element of the country’s traditional banking secrecy, President of the Swiss Bankers Association, Patrick Odier, has adopted a firm stance, declaring that the introduction of a withholding tax will serve as a good – and the only – alternative to a general automatic exchange of tax information.

Although the SBA remains vehemently opposed to the idea of an automatic exchange of tax information, its new President has revealed that the Association is advocating the idea of levying a withholding tax instead, in order to defend the interests of customers and to benefit the economy.

Under the proposal, rather than automatically divulge client data to foreign tax authorities, Swiss banks would automatically levy a withholding tax, and then return the sum to the account holder’s country of residence.

Nevertheless, the positive view of the withholding tax is not shared by all. Indeed, some Swiss banks still fear that to do so would mark the first step towards the end of the country’s system of banking secrecy. Experts also argue that the tax would prove too complicated to implement in practice.

Patrick Odier provoked criticism from his peers late last year when he suggested that foreign account holders should be required to sign a form confirming that they have already declared their money to their own tax authorities.

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