June 21, 2012 / 12:47 PM / 6 years ago

Japan, Swiss set up tax deals with U.S. Treasury

WASHINGTON/ZURICH (Reuters) - The U.S. Treasury Department said on Thursday it had reached agreements with Switzerland and Japan to crack down on tax evasion by Americans, a move meant to help banks in those countries comply with upcoming U.S. tax regulations.

The announcement expands the list of countries already cooperating with the Treasury to implement the U.S. Foreign Account Tax Compliance Act, or FATCA, a 2010 anti-tax evasion law.

Treasury said in February it was negotiating with France, Germany, Italy, Spain and Britain to set up government-to-government information-sharing deals.

The U.S. tax law has worried foreign banks that have U.S. clients as banks face penalties if they refuse to give the United States certain client information required under FATCA.

The law is particularly problematic for Switzerland, which has a tradition of strict bank secrecy. But the Swiss government said it would allow banks to comply and report accounts to the U.S. authorities by granting an exception to Swiss criminal law.

The Swiss government is trying to get U.S. tax investigations against 11 banks - including Credit Suisse CSGN.VX and Julius Baer BAER.VX - dropped in exchange for the payment of fines and the transfer of client names.

The banks are suspected of helping wealthy Americans evade taxes through secret Swiss accounts. Flagship bank UBS UBSN.VX was forced in 2009 to pay a fine and release the names of 4,500 clients to U.S. officials to end a damaging probe.

Switzerland is also seeking a deal to shield the remainder of its 300 or so banks from U.S. prosecution.

Swiss Finance Minister Eveline Widmer-Schlumpf said earlier this month that U.S. officials seemed to want to end the dispute before the presidential election in November.

The rules dictating how FATCA will be enforced have not been finalized. Treasury officials have said the rules may be finished as soon as August.

While Switzerland and the United States have agreed elements of a deal, they still have to conclude a final agreement, which Switzerland said would be negotiated in the months ahead.

The Swiss Bankers Association said it welcomed the move, particularly the fact that banks would be able to hand over data directly to the U.S. authorities and not via the government as in the solution proposed with the five European states.

“This better takes into account the particular characteristics of the Swiss financial center,” the lobby group said in a statement.

Reporting by Patrick Temple-West in Washington and Emma Thomasson in Zurich; Editing by Kevin Drawbaugh and Chizu Nomiyama

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