The Swiss Federal Council has announced that Switzerland and Mexico have agreed – at a technical level – to the extension of administrative assistance in tax matters under Article 26 of the OECD Model Convention.
The tax authorities of both States have initialled a revised Double Taxation Agreement (DTA). The DTA was negotiated in accordance with the key points agreed by the Federal Council. Mexico is the fifth country to initial a DTA with Switzerland with the extended administrative assistance clause.
The initialled double taxation agreement (DTA) with Mexico is to be submitted to the relevant Swiss Cantons and Business Associations for comments; subsequently, it will be submitted to the Federal Council for signing authorisation. Thereafter, the Federal Assembly must approve the agreement before it can come into force.
Reportedly, the Federal Council is of the view that the first double taxation agreement with the new administrative assistance provisions approved by Parliament should be subject to an optional referendum in line with established practice. The decision, however, on making a DTA subject to an optional referendum rests with Parliament.
Last week Switzerland and Norway initialled revised double taxation agreement in Oslo. That DTA also was negotiated in accordance with the key points agreed by the Federal Council. Similar efforts have been undertaken with Denmark and France as well.
The Federal Council decided on 13 March 2009 that Switzerland would change its policy on international cooperation in tax matters and adopt the OECD standard on administrative assistance in tax matters under Article 26 of the OECD Model Convention. The decision permits an exchange of information on tax matters in individual cases where a specific and justified request has been made. The Federal Council instructed the Federal Department of Finance FDF to immediately enter into negotiations on the revision of the DTAs with the USA and Japan and then with other OECD and EU States.