UN human rights expert Juan Pablo Bohoslavsky visited Switzerland in late September. His mission was to explore the human rights implications of Switzerland's fiscal and financial market policies and assess the country's efforts to combat illicit financial flows. In March 2018 Bohoslavsky will submit a comprehensive final report to the United Nations Human Rights Council. An initial interim report was nonetheless presented to the media in early October. The findings are likely to make waves in Switzerland.
To begin with, the report makes clear how harmful illicit financial flows are for human rights – tax flight abroad, profit shifting by multinational enterprises and the outflow of unlawfully acquired assets are depriving developing countries of resources that they could otherwise dedicate to a well-run education system and health sector – in other words the right to education and the right to health – and in general to a functional State governed by the rule of law. Tax havens that help conceal such funds are in part responsible for the failure to fully guarantee human rights in many places.
The report is indeed diplomatic in its description of Switzerland's role, but the message is crystal clear – much remains to be done if the financial centre and company location Switzerland is not to jeopardize human rights elsewhere! Most remarkable are the statements regarding Tax Proposal 17, the remake of Corporate Tax Reform III (USR III) which was defeated at the polls. Here, the UN expert expresses concern over the potentially harmful human rights repercussions of the revised reform. The Proposal could create new incentives for corporate profit shifting to Switzerland – in other words it could continue to help deny foreign countries the revenue they need in order to guarantee human rights. The report therefore calls on Switzerland to assess the planned reform for its possible social and human rights implications.
Also worth reading are the critical remarks on the exclusion of developing countries from the Automatic Exchange of Information (AEOI) in tax matters, and on the loopholes in Switzerland's measures to combat money-laundering. In the report, the Responsible Business Initiative seems a necessary complement to the Federal Council's National Action Plan (NAP), as the Council fully supports voluntary measures when it comes to corporate responsibility regarding human rights. Here the UN Expert recommends that the Federal Council should give serious consideration to necessary legislative action.