US Legislators Prepare New Law To Hit Offshore Banking

Tom Burroughes

3 March 2009

Offshore tax havens used by rich US citizens in Switzerland, the Cayman Islands and other nations are targeted for shutdown by a new bill at the US Senate, according to media reports.

In legislation that expands on a bill co-sponsored last year with then-Senator Barack Obama, Senator Carl Levin is proposing a broad crackdown on tax avoidance schemes. The bill comes ahead of a Senate hearing where a senior UBS executive is due to testify about an investigation of the Swiss banking giant.

"Offshore tax haven and tax shelter abuses are undermining the integrity of our tax system," said Mr Levin in a statement. "We cannot tolerate $100 billion in offshore tax abuses burning a hole through our budget each year. Companion legislation is expected to be introduced in the US House of Representatives, the aides said.

Separately in Washington, Switzerland's justice minister met on Monday with a senior US Justice Department official to discuss international finance issues.

Wealthy US nationals avoid more than $100 billion a year in taxes by hiding assets offshore, according to the Senate Permanent Subcommittee on Investigations chaired by Mr Levin. It is estimated that as much as $1 trillion of assets are held offshore by US citizens, according to industry figures.

Mark Branson, chief financial officer of UBS Global Wealth Management and Swiss Bank, is scheduled to be a witness at a subcommittee hearing on Wednesday.

The Obama administration is not interested in escalating a dispute with Switzerland over bank secrecy laws, Switzerland's top justice official said yesterday after meeting with her US counterparts.

US Attorney General Eric Holder and his deputy David Margolis "expressed their willingness to negotiate with Switzerland, to discuss with us, and especially in the UBS case," Swiss Justice Minister Eveline Widmer-Schlumpf told reporters.

"The United States is not intent on having an escalation but they are willing to work for a resolution," Ms Widmer-Schlumpf said Mr Margolis told her.