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International taxation laws can be used a mechanism to drive business competition and not just to enforce laws. In fact, the G20 often meets to discuss international taxation laws and coerce member nations to adopt stances it feels will either help or hinder international competition for business and finance. One major law change came in response to a 2008 probe into Switzerland's stance on tax evasion.
Switzerland has long stood for financial independence. One mechanism it used to protect independent finances was to uphold banking secrecy and classify tax evasion as a non-criminal activity. As a result, if a foreign country requested information about a tax holder who was suspected of evasion, the Swiss authorities could deny the request. Only if there was suspicion of fraud, a separate offense all together, would the authorities release information.
The IRS believed it was losing tax dollars each year to individuals who placed their dollars in Switzerland. Using the pressure of the G20, the United States threatened to "black list" Switzerland, which would mean a loss of prestige on the international financial markets that could compromise the Swiss tradition of financial prowess. In response, the Swiss authorities agreed to hand over thousands of names of private account holders in the bank UBS to avoid the classification. The notable court case cost UBS thousands of dollars, while the IRS collected additional taxes.
