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banks to place fiduciary deposits in foreign branches of Swiss banks in order to avoid

Swiss withholding tax of 35 percent. Canada similarly offers tax-free bank deposits to

foreign persons in currencies other than the Canadian dollar.58

With respect to the Austrian position an even more preferential tax regime is present as

regards to the well-established anonymous bank accounts allowed under Austrian law.

Austria has very well entrenched strict bank secrecy laws. The tax authorities in Austria

are only themselves allowed access to financial and bank records after an Austrian judge

has made an order. Moreover, Austrian judges will not give this approval unless evidence

can be provided that shows reasonable grounds to conclude that a criminal act has been

committed. 59 It has been estimated that up to 24 million anonymous bank accounts are

held in Austria with a net worth of about $100 billion dollars.


Similar to the United States, the United kingdom has other features present within its own

tax structure that has caused alarm within the countries designated by the OECD as

having preferential regimes because the U.K. rules with regard to domiciliary leads to an

uneven and unfair tax assessment. For instance, the United Kingdom has never taxed

foreign income of its residents if they are not domiciled there provided that the income is

58 See generally on this issue Langer supra note 46..The June 2000 OECD report conceded that holding company regimes and similar preferential tax regimes in 13 of the 29 member states might constitute harmful tax competition. But the real question how will the OECD deal with this internal blow as most of these nations have refused to give up their regime even though staunch and austere measures are proposed should other smaller countries refuse to abide by the OECD recommendations.

59 Ibid at page 670 after very intense pressure, the Austrian Parliament recently took steps to phase out Austria’s anonymous passbook savings accounts by June 2002. Such accounts have existed since the days of the Austro-Hungarian Empire.

60Ibid It is believed that most of the accounts held are on behalf of foreigners mostly Europeans from OECD member countries who have sought to expatriate their funds in order to reduce their tax burden.

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