As published on swissinfo.ch, Wednesday 18 May, 2022.
Switzerland has moved from third to second in an annual ranking of the worst global tax havens. Overall however, the country is going in the right direction, reports the Tax Justice Network.
Despite coming second behind the United States in this year’s reportExternal link, Switzerland reduced its financial secrecy by 17%, the NGO said on Tuesday. The report’s methodology is based on two main pillars: a “secrecy score” (i.e. the transparency of a country’s financial and legal system); and a measure of how much financial services involve offshore clients.
In both cases, Switzerland has improved, the Tax Justice Network wrote. But the country still falls short of other financial centres like Singapore (third), Hongkong (fourth), and Luxembourg (fifth).
Also a positive indicator for Switzerland is its adherence to global sharing of tax information, via bilateral agreements signed with around 100 countries since 2017. The failure to do the same is the big reason why the score of the worst performer, the US, is almost double that of the rest, according to the report.
However, Dominik Gross from the Alliance Sud NGO told the Tages-Anzeiger newspaper on Wednesday that Switzerland has still not signed such information-exchange agreements with many developing countries. Tax-dodgers from these countries thus have “nothing to fear” in parking their money in Swiss banks, said Gross: “They hide their money here from the tax authorities in their home countries, who could urgently use the funds to tackle the food crisis sparked by the war in Ukraine.”
Overall, however, front-runner America bears the brunt of much of the report’s criticism. Not only is the US score almost double that of other countries: it also comes as US authorities have been complaining about other nations – including Switzerland – operating regimes enabling tax avoidance.
In his first State of the Union address in April last year, President Joe Biden specifically mentioned “tax havens in Switzerland and Bermuda and the Cayman Islands”. Earlier this month, the US Helsinki Commission called Switzerland a “leading enabler of Russian dictator Vladimir Putin and his cronies”. Both allegations were rejected by the Swiss authorities.
According to the Tax Justice Network, meanwhile, “the US now fuels more global financial secrecy than Switzerland, Cayman and Bermuda combined”.