Switzerland's importance as a private banking hub will shrink after the country increased its tax transparency, according to Indian billionaire Gopichand Hinduja, a shareholder in the family's Geneva-based private bank.
The world's richest people are instead turning to countries like Dubai, Qatar and Singapore to house their assets as Switzerland begins to lose its allure as a haven, the 76-year-old London-based investor said.
"People are finding new havens. I don't think Switzerland can maintain its importance in banking," Hinduja said.Tax Justice Net, this is not 100 per cent true and Hinduja is not looking at the bigger picture.
Switzerland has been at the top of the financial tax secrecy index and it's there because of a combination of factors, one of which is that it is strong on the secrecy scale.
Alex Cobham, Director of research at Tax Justice Net said that it is true that Switzerland — among others — has had to reduce the extent of banking secrecy and provide information to other jurisdictions, but they have not seen any serious evidence of it losing its global role.
"Switzerland has had to give up some of that secrecy, so is everyone else as they are signing up to the OECD [Organization for Economic Cooperation and Development]," Mr Cobham told Sputnik.
Mr Cobham said that for serious banking, Dubai and Qatar would not be the first choice for most people and that is why Switzerland may not be losing its allure as a tax haven.
"There is increasing activity in Switzerland to create new ways of owing financial assets that don't need to be declared, so one country's authorities has to tell another country if someone has assets there. But they don't have to tell them if they have a life insurance product. This allows them to create a life insurance wrapper that allows people to hold assets that do not need to be declared," Mr Cobham said.
Perhaps the reason behind Mr Hinduja belief that Switzerland is losing its tax haven appeal could be down to the fact that for the last 10 to 15 years the Indian government has said it plans to crack down on what they call "black money" or income illegally obtained or not declared for tax purposes, yet not made much progress. There is a suggestion however, that the Swiss government will now start to cooperate with the Indian government. But if you were a wealthy Indian family in Switzerland you would feel worried about that.
Tax Justice Net has been working towards better transparent reporting since 2003 and the importance of exchange of information between countries.
"We have seen some progress but what is lacking is the inclusion of developing countries. So, it is easy for the US to get information from Switzerland but this is not the same for Ghana. These countries need to open up as well."