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Switzerland strikes $630m tax evasion deal with UK

GENEVA (AP) Swiss banks will have to pay 500 million Swiss francs ($630 million) to Britain as part of an agreement to end tax evasion, the Swiss government says.

Britain’s treasury described the deal struck by senior officials in Zurich on Wednesday as “historic”.

“The agreement will resolve the long-standing abuse of Swiss banking secrecy by those who seek to conceal the proceeds of tax evasion and is expected to secure billions of pounds of unpaid tax for the UK exchequer from 2013,” the treasury said in a statement.

The deal is the latest in a series struck by Switzerland in a bid to shed its image as a haven for tax cheats. The country inked a similar agreement with Germany earlier this month, though the sums involved there were much higher as Switzerland has long been a favoured destination for tax evaders from its northern neighbour.

The Swiss Bankers Association welcomed the deal, noting that Britain had agreed to accept an anonymous withholding tax in place of automatic information exchange on bank clients, something that Swiss financial institutions have fiercely objected to.

Under the deal, Switzerland will levy a withholding tax of between 27 percent and 48 percent on the Swiss accounts of British taxpayers.

British authorities will also be able to request information on up to 500 individuals a year whom they suspected of trying to hide assets in Swiss bank accounts.

To legalise money already in Swiss banks, British clients will have the option of making an anonymous one-off payment for taxes owed in the past, or declaring their assets to British authorities.

“The world has changed for tax evaders,” said Dave Hartnett, the senior British tax official who negotiated the deal for Britain. “A few years ago, nobody would have anticipated that we would conclude an agreement with Switzerland to tackle tax evasion.”

For decades Switzerland insisted that its distinction between tax evasion and tax fraud meant it couldn’t help other countries investigate suspected tax evaders. But in 2009 it caved in to demands for greater cooperation after being put on a tax haven “gray list” by the Paris-based Organisation for Economic Cooperation and Development.

The Swiss government said the agreement with Britain would likely come into force in 2013, unless Swiss law voters block it in a referendum.

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Published August 26, 2011 at 10:47 am (Updated August 26, 2011 at 10:46 am)

Switzerland strikes $630m tax evasion deal with UK

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