UBS-US tax deal rejected by Switzerland's parliament
- 8 June 2010
- From the section Business
A major tax agreement between the US and Switzerland has been rejected by the Swiss parliament.
The deal would have paved the way for Swiss banking giant UBS to disclose account details to US tax authorities.
The late vote by Switzerland's lower house of parliament is unlikely to kill off the deal, but may mean weeks of delay.
The deal had been agreed in order to head off possible US charges against UBS for aiding tax evasion.
The US alleged that 4,450 of its citizens hold secret accounts with UBS, and the bank has admitted that its managers helped US citizens evade their taxes.
"The Swiss government feared this could mean the end for UBS, which was already struggling with huge sub-prime losses," says the BBC's Imogen Foulkes in Switzerland.
Berne had promised Washington that account details would be made available by the end of August.
Yet this was seen as a step towards ending Switzerland's traditional banking secrecy - and not a decision the government was competent to take alone.
The parliament's rejection now throws doubt on whether the August deadline can be met.
The deal will have to go back to the Swiss Senate for revision, with a nationwide referendum one possible outcome.
"An unusual alliance of left and right wing members of parliament defeated the deal," our correspondent says, "with the Social Democrats demanding more controls over big banks, and the right wing Swiss People's Party objecting to limits on bankers' bonuses".
The United States warned it would take legal action if Switzerland reneged on the deal.
"We continue to monitor the events in Switzerland, and we stand ready to pursue all legal options available to us should the Swiss fail to provide the required information," said a spokesman for the Internal Revenue Service, the US government tax collection and enforcement agency.
Meanwhile, a senior Democratic Senator Carl Levin said a rejection of the treaty by Switzerland would be an "international embarrassment that can be laid at the feet of Swiss legislators".
"The United States should reject any further attempts by the Swiss to delay the UBS case," said Mr Levin, calling for court action to be brought.