US, Switzerland sign agreement to combat offshore tax evasion
Washington: In a significant move to combat tax evasion, the US and Switzerland today signed an agreement under which all Swiss banks will report the holdings of their American clients to US tax authorities.
"We are pleased that Switzerland has signed a bilateral agreement with us, and we look forward to quickly concluding agreements based on this model with other jurisdictions," Acting Treasury Secretary, Neal Wolin, said.
The agreement would facilitate the implementation of the information reporting and withholding tax provisions commonly known as the US Foreign Account Tax Compliance Act (FATCA).
Enacted by Congress in 2010, FATCA targets non-compliance by US taxpayers using foreign accounts.
The bilateral agreement signed today is the first based on the model published in November 2012 – the second of two model agreements – and marks another important step in establishing a common approach to combating tax evasion.
Switzerland is one of eight countries that have signed or initialled an Inter-Governmental Agreement (IGA) which helps to facilitate the effective and efficient implementation of FATCA.
In addition to the previously announced countries, Treasury initialled an IGA with Italy on January 24.
Treasury is engaged with more than 50 countries and jurisdictions to curtail offshore tax evasion, and more signed agreements are expected to follow in the near future.
On January 17, the Treasury Department and the Internal Revenue Service finalised the regulations implementing FATCA, providing additional certainty for financial institutions and government counterparts about the process for US account identification, information reporting, and withholding requirements for Foreign Financial Institutions, other foreign entities, and US withholding agents.