Embattled UBS AG has warned that Switzerland’s financial industry is at risk unless lawmakers approve a tax treaty with the US, and that other Swiss banks may be next to face pressure from US regulators.
In a letter to parliamentarians, the banking company said the US Internal Revenue Service has collected information on the cross-border activities of about 20 Swiss banks and may press for a crackdown on US tax evaders at these institutions as well.
UBS urged parliament to approve an August treaty signed by the US Treasury Department and Switzerland’s executive Federal Council on improving cooperation in tax evasion matters.
“The risks are very considerable for the Swiss financial center and the economy as a whole if parliament were to withhold its approval,” UBS said in the letter first reported on Friday by Zurich daily Tages-Anzeiger.
The bank confirmed its authenticity.
The Swiss government is scrambling to salvage the treaty after a Swiss court ruled in January that parts of it were illegal. It has asked parliament to sign off on the deal, which would temper Switzerland’s strict banking secrecy law to meet Washington’s demands for greater access to files on suspected US tax cheats.
“Apart from UBS, many other Swiss banks were involved in cross-border business with American clients,” the Zurich-based bank said, referring to offshore accounts for wealthy US customers.
“The IRS has obtained information on about 20 Swiss banks” as part of a recent amnesty program, UBS said.
“It is quite possible that the IRS wants to obtain information on other customers of these banks. Refusal by Switzerland to meet its obligations under international law could send a signal that would escalate these cases,” the banking company said.
A spokesman for UBS declined to comment on which banks might be involved.
UBS also said Switzerland risked ending up on a blacklist of uncooperative tax havens if lawmakers refused to bless the deal, which was reached after months of tense negotiations between Washington and Bern.
Swiss companies doing business in the US could then be subject to additional scrutiny by the IRS, it said.
Marlies Baenziger, a lawmaker for the center-left Green Party and member of the parliamentary finance committee, said the letter showed UBS was trying to intimidate parties into approving the treaty.
The nationalist Swiss People’s Party, the country’s largest, announced earlier this week it would oppose the deal in parliament.
RSS