Call for global information system to curb tax evasion

The leading developed nations have called for the creation of a global system to automatically funnel financial information about individuals and companies using offshore tax havens, but Switzerland does not want to co-operate.

The 34-nation Organisation for Economic Co-operation and Development (OECD), which is spearheading an effort to curb tax evasion by individuals and close some controversial tax loopholes for corporations, said the foundation of such a system was emerging because of reporting requirements newly imposed by the United States.

The Foreign Account Tax Compliance Act requires overseas financial institutions to send the Internal Revenue Service information about accounts held by Americans in an effort to curb the use of foreign tax havens.

But in Geneva, Swiss lawmakers yesterday refused to bow to pressure to vote on a deal with the US, exposing American tax dodgers with assets in Swiss banks and risking a clash with Washington.

A stormy session of the Swiss lower house, or National Council, refused for the second time to hold an emergency debate on the controversial "Lex USA" deal, which Washington has demanded must come into force by July 1.

The deal is seen as crucial if Swiss banks are to escape the threat of a raft of lawsuits in the US, and being barred from the big and profitable US market.

But they could also fall foul of Swiss law.