Ethics and governance in the European Financial centers

The AP has reported that the  U.S. government and Swiss banking giant UBS AG have reached a long-awaited agreement in a case over secret Swiss bank accounts for alleged American tax evaders, lawyers for both sides told a federal judge Wednesday.

The deal was announced during a telephone conference with the judge that lasted only long enough for lawyers to say an agreement had been reached. No details were announced.

However OBAMA tax views are clear enough: as a US law firm observes:

The Qualified Intermediary ("QI") program seeks to ensure that appropriate U.S. withholding is imposed on foreign persons. The proposed rules would require foreign financial institutions to withhold and report on foreign income and accounts of U.S. and foreign persons. Foreign financial institutions would be required to enter into agreements with the IRS to share information about their U.S. customers. Currently, the IRS has the burden to show that an account holder of a QI is a U.S. person if the account holder attests to being a non-U.S. person.

The President's plan would require QIs to identify all account holders that are U.S. persons and file IRS Form 1099 with respect to payments to U.S. account holders, including income from foreign sources. Any withholding agent making a payment to a nonqualified intermediary would be required to withhold 30 percent. Withholding agents paying gross proceeds from the sale of any security to a non-qualified intermediary not located in an income tax treaty jurisdiction would be required to withhold 20 percent. To get a refund of the amount withheld, account holders would be required to disclose their identities and demonstrate compliance with U.S. tax laws.

As Richard Murphy observes, this wording looks like something close to Automatic Information Exchange. If so, why not roll it out? After all, once people have systems in place for the US the extra cost for the rest of the world is marginal.