Swiss Voters Narrowly Accept Tax Cut Proposals

by Ulrika Lomas, Tax-News.com, Brussels

25 February 2008

Voters in Switzerland have 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.

The referendum on Sunday saw 50.5% of the turnout vote in favour of the reforms. However, voters in some of Switzerland's 18 cantonal districts rejected the proposals, including Bern, Jura, Fribourg and Neuchâtel and Vaud, casting doubt on whether the new tax measures can be implemented. The cantons have the final say on tax measures under Swiss law.

The government welcomed the overall result, arguing that the proposals would improve the country's tax competitiveness, attract more companies to the country, and thus boost investment and job creation. The government has indicated that further measures to reduce the company tax burden are also being considered.

However, opponents of the tax reforms, which included left-of-centre political parties and trade unions, contend that the close result reflects the growing opinion among the Swiss population that the tax system already unfairly benefits corporations and the wealthy.

Vaud's Finance Minister, Pascal Broulis told Swiss news service 24 Heures that it is "too soon" to say whether will proceed with the tax cuts, but stated that a legislative proposal will be presented to the federal cabinet in the coming months.

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