Reuters: Switzerland, despite bank settlements with the United States to disclose tax evaders, remains the top refuge for financial secrecy, according to a new international ranking of tax haven countries.
Switzerland is the world leader in financial opacity, only grudgingly conforming with disclosure agreements among developed countries while courting tax evaders in developing nations, said a report released on Monday by the nonprofit, nonpartisan Tax Justice Network.
Steeped in a long tradition of bank secrecy, Switzerland has recently signed information sharing agreements as part of a reporting program with the Organization for Economic Co-operation and Development. But these efforts have been “ineffective,” the report said.
Switzerland’s “widespread involvement in the administration and use of trusts, foundations and offshore companies remain a major barrier to tackling tax evasion and illicit financial flows,” the report said.
Officials at the Swiss embassy in Washington were not immediately available for comment.
U.S. authorities continue to pursue Swiss banks for information about U.S. clients’ assets. Credit Suisse Group AG said this summer it is under a grand jury investigation.
UBS AG in 2009 paid $780 million to settle a Justice Department investigation.
The United States ranked fifth, behind Switzerland, the Cayman Islands, Luxembourg and Hong Kong among the most secretive nations, according to the report.
U.S. law allows foreigners to earn income from property that can be kept secret from the tax and criminal authorities in their home countries, the report found.
“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,” the report said.
The United States ranked first among tax havens in the advocacy group’s last report from 2009. The methodology was changed this year to account for how egregious a country’s secrecy is considered, with less emphasis on the size of its economy.
U.S. tax evaders “rob the Treasury and force average taxpayers and small businesses to pick up the tab,” Nicole Tichon, executive director of the Tax Justice Network, said in a statement. Legal reforms in the Dodd-Frank financial reform law plus the Foreign Account Tax Compliance Act have cracked down on tax evasion, but the U.S. needs to do more, she said.
The U.S. loses about $100 billion a year in taxes lost to assets held in offshore jurisdictions, Tichon said, citing a Senate investigation.
U.S. Treasury officials were not immediately available for comment.
The report highlighted concerns with UK jurisdictions.
The English Channel islands of Jersey and Guernsey, which are Crown Dependency jurisdictions and ranked seventh and 21st respectively, have become bastions for financial secrecy.
In all, 10 secrecy jurisdictions on the list are either British Crown Dependencies or British Overseas Territories, like the Cayman Islands and Bermuda, which ranked second and 12th, respectively.
The British network of tax havens has been “among the most important reasons for the reach and power of the City of London,” the report said.