Swiss Opposition Grows to Legal Change That Could Help Out UBS
(Bloomberg) -- A law that would allow Swiss companies, including banking giant UBS Group AG, to deduct foreign financial fines from their tax bills may face hurdles after opposition parties vowed to rally popular support against the measure in a possible referendum.
Green and left-leaning politicians who voted against the plan in parliament have called for action to collect signatures for a referendum on the law, which they fear would damage efforts to clean up Switzerland’s financial industry, according to newspaper Tages Anzeiger. UBS is currently challenging a 4.5 billion-euro verdict ($5 billion) in Paris over allegations the bank helped French clients stash undeclared funds in offshore accounts.
The proposed law, which was approved by the Swiss parliament on June 19, is now in a 100-day challenge period during which a referendum can be called upon the collection of 50,000 signatures, said Peter Minder, a spokesman for the government. Should no referendum be brought, the law will enter into force after the challenge period expires, he said.
The legal changes would mean that UBS might be able to deduct any potential fine resulting from the French case from its Swiss tax bill. The bank is appealing that ruling, and the trial, originally set for June 2020, was rescheduled to March 2021 because of the coronavirus pandemic.
UBS declined to comment on the new law and how it might apply to the bank.
Read more: UBS Top Court Loss Sets Up Showdown With French Prosecutors
Should the proposed law enter into force, companies will have to meet one of two conditions in order to benefit from the tax break: the foreign fines must violate Swiss public policy or the company must credibly demonstrate that it has done everything reasonable to comply with the law, according to the Tages Anzeiger.
UBS is also in legal gridlock in the Swiss courts over the transfer of client data to France as concerns mount that Paris prosecutors might be able to use the information on thousands of customers to bolster the tax evasion case against the bank, Bloomberg has reported.
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