Economy

Main article: Economy of Switzerland See also: Banking in Switzerland and Taxation in Switzerland

The Omega Speedmaster worn on the moon during the Apollo missions. In terms of value, Switzerland is responsible for half of the world production of watches.[36][73] Switzerland has a stable, prosperous and high-tech economy. In 2011, it was ranked as being the wealthiest country in the world in per capita terms (with 'wealth' being defined to include both financial and non-financial assets).[74][75] It has the world's nineteenth largest economy by nominal GDP and the thirty-sixth largest by purchasing power parity. It is the twentieth largest exporter, despite its size. Switzerland has the highest European rating in the Index of Economic Freedom 2010, while also providing large coverage through public services.[76] The nominal per capita GDP is higher than those of the larger Western and Central European economies and Japan.[77] If adjusted for purchasing power parity, Switzerland ranks 8th in the world in terms of GDP per capita, according to the World Bank and IMF (ranked 15th according to the CIA Worldfactbook[77]). The World Economic Forum's Global Competitiveness Report currently ranks Switzerland's economy as the most competitive in the world,[78] while ranked by the European Union as Europe's most innovative country.[79] For much of the 20th century, Switzerland was the wealthiest country in Europe by a considerable margin (by GDP per capita).[80] In 2005 the median household income in Switzerland was an estimated 95,000 CHF, the equivalent of roughly 100,000 USD (as of December 2010) in nominal terms. Switzerland also has one of the world's largest account balances as a percentage of GDP.

How did tax havens come to be? The case of Switzerland

We know in general why they exist. But why did specific countries or jurisdictions develop as particular types of tax havens at particular moments in time? An excellent new paper* by Christophe Farquet of the University of Lausanne tells a convincing story of the origins the biggest tax haven of all: Switzerland. It begins in the 1920s. Among the range of contributory factors, two stand out. From the international perspective, there was a strong demand from wealthy people and some companies for a secure, tax-free bolt-hole. Most of Europe was facing some combination of political instability, powerful labour movements, and strong political

pressures to raise public revenues to placate those movements. Switzerland provided a convenient bolt-hole at the right time. But why were the Swiss so able and willing to put in place the legislation and procedures to ensure that they cornered most of the business when the UK, for example, was potentially a powerful competitor. The simple answer is that in Switzerland industrialists were relatively weak and the highly decentralised state was even weaker. The Swiss bankers could easily get their way. In the UK, the voice of the tax collector the Treasury and the revenue authorities was much more powerful. British policy involved balancing the temptations to become a tax haven against the pressures to raise money for urgent public purposes. There is of course more to the story. Farquet tells it well. The paper will be published when it becomes available.

International Tax Research

The efficiency and equity of tax enforcement in developing countries depends not only on the quality of domestic tax policy and administration, but also on the broader international tax context. This includes questions related to offshore financial jurisdictions, the international legal framework for taxing transnational firms, international tax competition, tax incentives and exemptions and the broader category of illicit capital outflows. This section is a resource for researchers and policy makers interested in this broader international context. It provides knowledge, data and commentary on international tax.