Wednesday, March 3, 2010
South Koreaís Ministry of Strategy and Finance has disclosed that there are talks in progress to add a provision for the exchange of tax information to the existing double taxation agreement (DTA) between South Korea and Switzerland.
The current bilateral DTA was signed between the two countries in 1981, but makes no allowance for the exchange of information. The extent of the proposed additional provision is being negotiated, and a further meeting is expected in July to finalize its specific details.
It is expected that an additional protocol to the existing DTA will be signed as soon as those details are resolved, and it is hoped that it will be become effective as early as next year.
It is said to be unlikely, however, that South Korea will then be able to obtain full details of transactions on an individualís funds in Switzerland. It is more likely that the South Korean authorities need to provide proof of criminality and will also have to provide the number of the account to which the funds have been transferred.
There will, it is reported, be no right of access to all of the accounts of a presumed tax evader. The South Korean authorities are, nevertheless, hoping that even such a limited right of access will deter future tax evasion.
Despite accepting the relevant provisions of the model tax convention of the Organization for Economic Cooperation and Development (OECD), Switzerland has persisted in ruling out the automatic exchange of tax information, due to the maxim of banking privacy. This has been reiterated recently, despite pressure from OECD countries, including now South Korea.