Tuesday, April 7, 2009

Treasury Continues to Go After Those Hiding Assets in Switzerland

The Treasury Department has announced that the United States and Switzerland will begin negotiation of a protocol to amend their bilateral income tax treaty, which entered into force in 1996. Consistent with the announcement made by the Swiss Federal Council on March 13, 2009, the two countries intend to revise the tax treaty so the two countries can exchange information for tax purposes to the full extent permitted by Article 26 of the Organization for Economic Co-operation and Development (OECD) Model Income Tax Convention.

“As called for in the G-20 meeting in London, we believe that all countries must adhere to international standards for exchange tax information (sic). We welcome moves by Switzerland to implement international standards by agreeing to revise the U.S.-Switzerland tax treaty for the exchange of information for tax purposes with the U.S.” said Treasury Secretary Tim Geithner, who failed to report and pay required taxes on income he earned while working for the International Monetary Fund.

“I look forward to swift conclusion of an agreement; this agreement has the potential to serve as an example for other leading financial centers around the world," Geithner continued.

Negotiations are expected to begin April 28 in Berne, Switzerland.

1 comment:

  1. How about the reverse currency swap agreement the Fed did yesterday. Of note in the FT report:

    "There are three scenarios in which foreign currency swap lines might be useful. First, second-tier US financial institutions with operations abroad might find themselves in need of “lender of last resort” financing in foreign currency but unable to qualify for direct loans from the relevant foreign central bank. Second, the foreign exchange funding market could become highly illiquid, freezing up the private supply of foreign exchange. Third, US-based financial institutions might not be able to mobilise US-based collateral swiftly enough to meet demands abroad."

    This is pretty dire contingency planning, as though a currency market dislocation is in the cards.