January 7, 2010 / 9:06 PM / 8 years ago

Canadian probe into tax cheats hits snag at UBS

OTTAWA (Reuters) - Canada still hopes to persuade UBS to hand over the names of Canadian clients suspected of tax evasion but it may sue the Swiss bank to get the list if negotiations fail, Revenue Minister Jean-Pierre Blackburn said on Tuesday.

The government, which has been in talks with UBS since last September, wants the names of offshore account holders who may have abused Swiss bank secrecy laws to dodge Canadian taxes.

The U.S. Internal Revenue Service has recovered billions in lost taxes as part of a similar UBS investigation.

Blackburn repeated a threat to sue the bank if necessary to compel it to provide the information.

“We still keep the focus on discussing with them to obtain this list on a voluntary basis,” Blackburn told reporters on a teleconference.

“If we do not, we will still go ahead with the court possibility to obtain that list,” he said.

A spokesman at UBS Canada could not immediately be reached for comment.

So far, 96 Canadian UBS clients have volunteered to come clean with Canada. Of those, 32 have reached settlements, resulting in C$25 million ($24 million) in recovered taxes, Blackburn said.

Blackburn also has a list of about 110 names of people who allegedly set up accounts in Liechtenstein to avoid taxes in Canada, leading authorities to examine the accounts of certain clients of the trading arm of the country’s top bank, Royal Bank of Canada, although the bank itself is not accused of any wrongdoing.

The minister is in Europe this week to meet with his counterparts from Britain, Germany and France as well as with tax policy experts at the Organization of Economic Cooperation and Development (OECD), headquartered in Paris.

The officials seek to coordinate their battle against abuse of tax havens, or jurisdictions that attract investors because of lenient taxes, bank secrecy laws or lack of transparency.

Canadian Finance Minister Jim Flaherty has held talks on exchanging tax information with several countries, including Cayman Islands and Bahamas as part of a strategy for cracking down on cheats.

Under the proposed agreements, the countries agree to provide the financial details Ottawa needs to properly tax revenue deposited in banks there. So far, Canada has signed one agreement with the Netherlands for Netherlands Antilles.

Blackburn said the amount Canadians have invested in countries that could potentially be used as tax havens amounted to C$146 billion in 2009, up from C$88 billion in 2003. Safeguarding cash in those places is not illegal but makes it easier to avoid declaring income for tax purposes.

($1=$1.04 Canadian)

Reporting by Louise Egan; Editing by Frank McGurty

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