Geneva commodities traders drawing more attention
BERN, SWITZERLAND – Transnational companies that are given special low tax status by cantons had profits of CHF53 billion in 2008, figures published Wednesday night by Swiss public television show. They are based on information RTS obtained from the federal government, which did not reply to RTS’s request for the number of companies involved. The profits are published for the first time, according to watchdog group the Berne Declaration.
Low or no taxes don’t sit well with the EU
The special tax deals have been targeted since 2005 by the European Union as discriminatory.
“For a dozen years,” RTS reported 8 October, all companies, whether Swiss or foreign, with 80 percent of their activity outside the country, may ask for a special tax status (un régime fiscal spécial). This favoured company status allows them to cut by half the taxation on profits, compared to the regular tax system. Some CHF266 billion were, in this way, under-taxed in the space of five years.”
Commodity trading, with spectacular growth, the bulk of firms with tax deals
The Berne Declaration says that the bulk of the foreign-based companies are commodity trading firms and it argues that “commodity companies, which generally benefit from a special fiscal status, are heavily active in countries in the South. Switzerland is thus helping, through these special tax deals, to pillage the tax revenues of these countries.”
The figure published Wednesday is higher than than the estimate of CHF39b published in August by the USS, Union syndicale suisse, which represents trade unions.
The Swiss federal finances comptroller published a report in February 2012 detailing problems due to inadequate surveillance of foreign companies that had earlier benefited from tax breaks. The report led to Seco, the economic ministry, reinforcing its surveillance system. The companies benefited from cantonal and federal tax deals to entice them to set up operations in parts of Switzerland that were deemed to be disadvantaged. These economic development incentives were abandoned in 2007.
Too big to fail to be noticed
The spectacular growth of the commodities trading business in the past decade in Switzerland and more specifically in Geneva was put in the spotlight two weeks ago by Aljazeera, in an article entitled “The giants of commodity trading: Switzerland’s commodities sector has grown spectacularly over the past decade, but is it an industry beyond the law?”:
“The industry is large, very large. Collectively, we are talking over $3 trillion of world trade in commodities. But believe it or not, the dominant player in all this is Switzerland and the Lake Geneva region. A staggering 25 percent of world commodities trade goes through that tiny country alone after experiencing strong growth over the last two decades.”
Ed. note: About the Berne Declaration, from its web site: “The Berne Declaration is a Swiss non-governmental organization with 20’000 members. Through research, public education and advocacy work, it has promoted more equitable, sustainable and democratic North-South relations since 1968. The Berne Declaration monitors the role of Swiss corporations, banks, and government agencies.”