Last week, the Treasury Department announced that the “competent authorities” of the United States and Switzerland have entered into a Mutual Agreement under the current U.S.-Swiss Income Tax Convention (1996). The agreement is intended to facilitate more effective tax information exchange between the two countries. (See link to text below)

*”I am pleased that this Mutual Agreement on tax information exchange has been reached with Switzerland, a key financial center,”*stated Acting Treasury Secretary Kenneth W. Dam. He said the Agreement is a significant step in efforts to ensure that no safe haven exists anywhere in the world for the funds associated with illicit activities, including tax evasion. *”I look forward to continuing progress with Switzerland and other financial centers in this important area,”* he continued.

On Friday, January 24, letters exchanged by the Acting Treasury Secretary and Swiss Finance Minister Kaspar Villiger (see link below) welcomed the agreement as important to the administration and enforcement of the tax laws of each country. Also expressed was the intent of the two countries to maintain a dialogue with a view to monitoring and improving the functioning of the current Income Tax Convention, and to explore other ways to improve cooperation between the two countries. The letters further noted that the renegotiation of the Income Tax Convention could enhance the relationship between the two countries.

Treasury’s Assistant Secretary for Tax Policy Pamela Olson said access to needed information is vital to the efforts to ensure full and fair enforcement of U.S. tax laws. *”This Mutual Agreement should improve our access to needed information under the current bilateral tax treaty between the United States and Switzerland. We look forward to working with Switzerland to further improve this relationship,”* she stated.

Ms. Olson also confirmed Treasury’s commitment to improve and expand the U.S.’s broad network of bilateral tax treaties and tax information exchange agreements, pointing out that better tax information exchange relationships will permit the IRS to *”obtain the information it needs from other countries so it can pursue taxpayers attempting to hide income offshore to avoid their tax obligations.”*