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OFFSHORE BANKING

Swiss to work with U.S. to save UBS tax agreement

Bloomberg News

Switzerland will work with the United States to save a tax settlement involving UBS after a Swiss court ruling jeopardized the disclosure of data on as many as 4,200 of the bank's clients.

Switzerland will continue talks with the U.S. and may ask parliament to approve the settlement agreement, Swiss Justice Minister Eveline Widmer-Schlumpf said in Bern Wednesday. The Federal Administrative Court last week ruled the deal that could have sent information to U.S. tax officials isn't fully enforceable.

Switzerland agreed in August to process data on 4,450 accounts for the U.S. to help UBS settle a lawsuit that sought information on as many as 52,000 bank clients suspected of tax evasion. After last week's court ruling, the Swiss government seeks to avoid the re-opening of that lawsuit against the country's biggest bank.

``The Swiss government wants to gain more time because they can't decide anything at the moment and they don't know how to solve the problem,'' Peter V. Kunz, a professor of law in Bern said by telephone. ``They want to make clear to the U.S. how seriously they take the problem and they want more information from their U.S. counterparts.''

The accord struck by Switzerland and the U.S. last year defined fraud too broadly and doesn't change the existing Swiss law on when the country discloses bank clients' information, five Swiss judges ruled in their verdict published Jan. 22. The failure of U.S. citizens to complete certain tax forms or declare income is tax evasion under Swiss law, which doesn't require bank secrecy to be lifted, the court ruled.

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