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UBS tax deal inches closer

City A.M. Reporter
A Swiss-US deal to end a tax dispute that nearly crippled UBS and undermined Swiss bank secrecy inched closer to full parliament approval as the Swiss upper house gave it its backing yesterday.

The deal is yet to be approved by the parliament’s lower house, which will vote on it next week. Yet the chances of full parliamentary backing have improved since Switzerland’s main party, the right-wing SVP, lifted its objections in May.

“The vote of the SVP will be key also in the lower house. But I think in the end a majority should back the UBS deal,” Fabio Abate, a member of the liberal party who sits in the lower house, said.

However a green light is not yet certain. “I think it will be slightly more difficult in the lower house,” Swiss President Doris Leuthard said when asked about the chances of the lower house supporting the UBS deal.

The upper house also voted yesterday against allowing a referendum on the tax deal. But the question is still open on whether the lower house would do the same, Abate said. A referendum would delay by several months the UBS agreement coming into force.

The US agreed on 19 August 2009 to drop tax evasion charges against UBS after Berne promised it would disclose to US tax officials bank details of 4,450 of the bank’s US clients in breach of Swiss bank secrecy laws.

But a Swiss court ruling in January blocked the data transfer, forcing the government to bypass the court ruling with a legal patch that requires parliamentary approval and risks delaying the sharing of bank client information beyond a deadline agreed for the end of August.

The US had accused UBS of helping rich Americans hide almost $20bn of untaxed money in secret accounts.

TIME LINE | TAX ROW

• 19 June 2008: Former UBS banker pleads guilty to helping a billionaire hide $200m from US tax authorities, part of a broader probe.

• 12 November: Raoul Weil, head of UBS’s wealth management business, charged with conspiring to help wealthy Americans hide $20bn of assets from US authorities.

• 18 February 2009: Swiss regulator FINMA orders UBS to identify certain US clients to settle criminal fraud charges.

• 19 February: US authorities pursue civil lawsuit to access details on 52,000 UBS clients.

• 20 February: UBS warns it could go out of business if it complies with an order to reveal the names of suspected US tax dodgers and would require it to violate Swiss law.

• 2 April: US authorities arrest and charge accountant in Florida in first of what they say could be a series of tax evasion prosecutions of American clients of UBS.

• 10 July: CEO Oswald Gruebel sends memorandum to bank’s top executives saying it could not comply with the US request to disclose the identity of the 52,000 account holders.

• 19 August: Switzerland says will hand over details of 4,450 bank accounts to US.

• 8 Januaray 2010: Swiss court rules regulator FINMA broke bank secrecy law last year when it ordered UBS to hand over files of nearly 300 clients to US authorities.

• 24 February: Switzerland asks parliament to turn into law a deal with Washington that got UBS off the hook.

• 15 April: Seven former US clients of UBS charged with filing false tax returns.

• 3 June: Swiss back US tax deal.