In a statement, the government said it had "adopted definitive negotiation mandates for introducing the new global standard for the automatic exchange of information in tax matters with partner states".
"Negotiations with partner states should commence shortly," it added.
Long the bedrock of the Swiss financial sector, banking secrecy has come under mounting pressure since the global financial crisis.
The United States and European Union — of which Switzerland is not a member — have repeatedly pushed the Alpine country to give ground as they try to crack down on tax cheats who stash cash abroad.
The financial crisis, combined with scandals such as the Bernie Madoff fraud case in the US which rippled across the world's banking sector, have spurred a tougher global regulatory environment.
The Swiss government had already announced plans to hold talks on information-exchange but had to formally adopt a negotiating mandate before they could begin.
"Switzerland reaffirms its intention to introduce the statutory basis for the automatic exchange of information in a timely manner so that Swiss financial institutions could commence collecting the account data of foreign taxpayers in 2017," it said on Wednesday.
"The first exchange of information could take place in 2018, subject to parliament and possibly voters approving the necessary laws and agreements in good time," it added.
Switzerland has lagged behind a group of 40 countries which have already announced that they will adopt new international standards, start collecting data in 2016 and exchange it from 2017.
Bern previously agreed to give ground in some areas in order to defend the overall principle of privacy.
For example, bilateral deals with Britain and Austria force depositers who have not declared revenue at home to come clean with their own governments or have their accounts taxed by the Swiss, who then transfer the funds without naming the clients.
But the likes of the United States and France have been unwilling to let Switzerland do anonymous tax collection on their behalf, and Switzerland ultimately caved in to their demands to hand over details of undeclared accounts.
Swiss banks, meanwhile, have faced massive lawsuits from aggrieved countries who accuse them of abetting tax dodging.
In the wake of such challenges, the banks have chosen to order foreign clients to get their tax affairs in order or face having their accounts blocked.
TAX EVASION
Swiss set to join talks on bank data exchange
Switzerland's government decided on Wednesday to launch talks with other nations on the automatic exchange of bank account details opening the way to a possible end to Swiss banking secrecy by 2018.
TAX EVASION
Switzerland’s banks remain among the world’s most secretive
Despite the progress made over the years, the Swiss financial sector continues to be one of the least transparent in the world. But there is good news too.
Switzerland is in the third place in the 2020 Financial Secrecy Index released by the non-governmental organisation (NGO) Tax Justice Network (TJN), which rates 133 nations based on their financial transparency.
Two other European countries, Luxembourg and the Netherlands, are also ranked among the top 10 least transparent nations on the TJN’s list.
Despite being in the third place, Switzerland ranks better this year than it did in the previous edition of the Index, which is released every two years — it slipped from the first to third place. The Cayman Islands and the United States took the first and second spots, respectively.
Switzerland reduced its risk of being an offshore haven for tax cheats by 12 percent, “finally improving enough to move off the top of the index”, TJN said.
READ MORE: Switzerland's strangest taxes – and what happens if you don't pay them
This improvement is mainly due to Switzerland extending its international network for the automatic exchange of customer information to more than 100 countries.
Also, in a referendum held last year, Swiss voters accepted the Federal Act on Tax Reform and AVS Financing (TRAF). This legislation introduced major changes in the Swiss tax system by ending some preferential tax schemes and replacing them with new regulations which are in line with international standards.
This tax reform prompted the European Union to change Switzerland's status from ‘tax haven' to one which is EU-compliant, removing strict controls on transactions within the EU.
So why, despite all the reforms, does Switzerland still rank among the world’s least transparent nations?
According to a Swiss NGO Alliance Sud, wealthy people from poor countries can still hide their money here from the tax authorities of their home nations.
Alliance Sud noted that despite the progress made in the past years by Swiss financial institutions, “the fight against tax evasion remains insufficient”.
Switzerland is the world’s biggest centre for managing offshore wealth, with a quarter of global assets invested here.
For years, it has been placed on various lists of tax havens where wealthy foreigners could park their money. Faced with widespread criticism for this practice, Switzerland passed an anti-money laundering law in 1997 and introduced strict regulations against tax evasion.
Please whitelist us to continue reading.
Member comments