Private Bankers Demand Tax Breaks On Criminal Fines by Matthew Allen, SwissInfo.ch
Should Swiss taxpayers foot part of the bill for the criminal misbehaviour of companies? Private bankers believe that billions of francs in fines imposed by other countries for tax evasion offences should be tax deductible.
The reason? Swiss banks should not be responsible for upholding the laws of foreign countries.
Starting with a $780 million fine for UBS in 2009, the United States alone has hit more than 80 Swiss banks with penalties totalling well over $5 billion. More financial sanctions are expected, not just from the US but from France, Belgium and other countries.
With the bill stacking up, the Swiss cabinet drew up a draft law that would ban tax deductions on fines, but allow relief when a company is forced to pay back illicitly earned profits. Should this pass parliamentary approval, Credit Suisse would be able to claim tax deductions on $800 million of the $2.8 billion sanction imposed on it by the US in 2014.
But the Swiss Private Bankers Association (SPBA) wants more. In its annual report, issued on Tuesday, the lobby group argued that the law should not be changed at all. The SPBA wants to retain the legal status quo, which currently allows a degree of discretion on the part of the tax authorities on whether to grant tax relief on fines.
The key argument, according to the SPBA report, is: “Foreign legal systems are not valid in Switzerland”. In other words, as long as a company does not break Swiss law it should be able to claim deductions on fines imposed by other countries.
The Swiss Bankers Association (SBA) supports this view, also arguing that the proposed law change would violate the constitutional principle of taxing individuals or entities according to their capacity to pay.
What do you think: should companies be able to claim tax relief on criminal fines?
Write your answer in the comments.