The Swiss government has revealed that the working groups announced by Finance Minister Hans-Rudolf Merz to improve the tax framework for companies have been appointed.
According to a statement issued by the Federal Department of Finance, the three
panels have been named as the International Tax Competition Working Group, the
VAT Working Group, and the Tax Relief for Families Working Group.
The corporate tax reforms aim to retain and improve Switzerland's position
in international tax competition, and together with the VAT reforms, will constitute
the focus of the fiscal strategy which Merz is pursuing in this legislature.
On February 24th, voters in Switzerland narrowly approved a package of government-proposed
tax measures which aim to ease the tax burden on dividend-paying companies.
The proposed tax reforms seek to ease the burden of double taxation by reducing
the taxable amount of dividends paid to companies and individuals to 50% and
60% respectively.
The tax cuts will apply to shareholders who own at least 10% of a company's
stock. It is expected that both local and foreign companies based in Switzerland
will benefit under the new tax regime.
However, the government is of the view that, even after this referendum on
the second series of corporate tax reforms, "not all problems relating
to corporate taxation were resolved".
"Switzerland risks losing ground in terms of international tax competition.
Further steps are therefore necessary regarding corporate taxation. Switzerland's
position in international tax competition must not only be maintained, but also
be improved as far as possible," the Finance Department's statement argued.
"Federal Councillor Merz has therefore established a working group which
will work out the goals of additional reforms to corporate taxation. In addition,
the working group on International Tax Competition must draw up measures with
which these goals can be achieved. As a further step, these measures should
be prioritised," the statement explained.
While the government conceded that Switzerland's ongoing dispute with the EU
over its tax system will be touched upon in the working group's discussions, it was
insistent that the cantonal tax systems - the focus of this tax dispute - "should
not be included" and that there will be "no follow-up implementation
of internal EU rules".
"The results of the working group in which the cantons are represented
initially serve as a forum for formulating opinions, and later as a basis for
talks with trade and industry," the Finance Department stated, adding that
initial results are not expected before autumn 2008.
In the case of VAT, the Federal Council has already taken certain general decisions, after it emerged from the consultation procedure that the desire for
a simplification of the VAT system met with broad approval.
In January 2008, the Federal Council instructed the Finance Department to draw
up proposals for a revised VAT Act with a uniform tax rate of 6.1%, and tax liability removed from as many
exemptions as possible.
Along with tax relief for companies, the government believes the VAT reforms
will provide for more growth and strengthen Switzerland as a business location.
The VAT reform proposals are due to be put before Parliament by the summer
of 2008.
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