Liechtenstein should continue to have an attractive, competitive, and high-performance tax system that takes account of the country's tax tradition while ensuring international compatibility, according to Prime Minister Otmar Hasler.
The "Future of the Liechtenstein Tax Location" proposal, recently introduced to the public, aims to update the jurisdiction's tax laws, which have remained largely unchanged since 1961.
The government expects that, by the end of October, the draft of a new Tax Act will be made available.
For the taxation of individuals, the new tax system continues to apply a combination of fixed property and income taxes. The property tax will be calculated by reconciling assets to a special type of income, thus more closely linking property and income tax. The initial goal is to standardize the taxation of income from assets; in the long term, this type of taxation will be integrated into an interest-adjusted income tax.
The focus of the reform package, however, will be the introduction of a uniform profit tax for companies. The current capital tax and the coupon tax on securities will be abolished. The new profit tax envisages a moderate tax rate of 12.5%, combined with a deduction for equity capital and an exemption for earnings from holdings.
The planned introduction of group taxation for group companies aims to compensate for any losses within a corporate group. The taxability of corporate income is coupled to the Liechtenstein domicile of corporate management or the existence of business premises in Liechtenstein: If the domicile of the general management is in Liechtenstein, unrestricted tax liability applies; if the company only maintains business premises in Liechtenstein, tax liability is restricted.
"For the Liechtenstein financial centre, it is of fundamental importance to preserve the attractiveness of the location for asset management structures for individuals or for multiple investors," the government stated.
"The tax concept therefore pays particular attention to the taxation of companies for asset investments by individuals. As private asset companies, such investments will henceforth be subject to an attractive taxation regime," it added.
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