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Multinationals operating in Switzerland could be required to draw up country-by-country (CbC) reports from the 2018 tax year if the Swiss Parliament approves new proposals put forward by the Federal Council.
On November 23, the Swiss Federal Council adopted a dispatch on the automatic exchange of CbC reports and the federal legislation required for its implementation. CbC reports will provide information on how the turnover generated and the taxes paid by a multinational group of companies are distributed globally.
Only multinationals with an annual consolidated turnover of more than EUR750m (USD792.9m) (or the equivalent in the national currency as of January 1, 2015) will be required to provide CbC reports. The Federal Council expects that around 200 groups resident in Switzerland will be affected.
To implement the new rules, three legal bases must exist. In the first instance, the OECD/Council of Europe Convention on Mutual Assistance in Tax Matters must enter into force. This is scheduled for January 1, 2017, and will be applicable for Switzerland from January 1, 2018. Second, the Multilateral Competent Authority Agreement (MCAA) on the Exchange of Country-by-Country Reports must be implemented. Switzerland signed this agreement on January 27, 2016, and it will now be submitted to Parliament for approval. Finally, the Federal Act on the International Automatic Exchange of Country-by-Country Reports of Multinationals must be passed by Parliament. The Federal Council is submitting this legislation to Parliament.
If Parliament approves the proposals and a referendum is not held, the MCAA and the Federal Act should enter into force at the end of 2017. Multinationals in Switzerland would therefore be obliged to draw up CbC reports from the 2018 tax year. Provided that the relevant legislation enters into force by the end of 2017, multinationals would be able to voluntarily submit country-by-country reports for tax periods before 2018.
The Federal Council expects the exchange of CbC reports with partner states to begin in 2020. The Federal Council will determine the countries with which it wishes to exchange data.
Once the relevant bilateral agreements have been reached, CbC reports will be transmitted automatically on an annual basis to the tax authorities of the countries where affected companies have business units.
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