Zurich Economic Chief Plays Down Tax Advantages

by Ulrika Lomas, Tax-News.com, Brussels

08 January 2002

Stephan Kux, responsible for economic development for the Swiss Canton of Zurich, says that tax rates aren't that important in the competition against other cantons to attract incoming businesses: “We don’t really feel in competition over tax rates. Quality of life issues are far more important and it makes a difference if you locate in Zug or Zurich: Zug doesn’t have an opera house.”

Talking to SwissInfo, Kux said that Zurich is well placed in the European investment league table. “We are around sixth or seventh,” he says. “Of course, London, Paris and Frankfurt are ahead of us, but we are in front of Barcelona and Milan, and Zurich in general is seen as a very attractive and cosmopolitan city.”

Nonetheless, competition is strong from other Swiss cantons as well. Geneva and Lausanne are also home to the headquarters of many international companies, and Basel is an important centre for the pharmaceutical industry. Small neighbouring cantons like Zug and Schwyz are also trying to attract investors with extremely low tax rates.

The proximity of Kloten airport is also an important selling point for Zurich, though Kux says it’s a double-edged sword: “The airport is of great importance but there is a conflict with the quality of life. We certainly need the airport but a balance has to be struck between the number of flights and the disruption caused by noise and pollution.”

There are also advantages and disadvantages for Zurich because Switzerland is not a member of the European Union. “At least the bilateral agreements with the EU will result in the freedom of movement and that’s important as Switzerland is regarded as difficult in the granting of work permits.” Kux says.

“We’ll be inside the single market and outside the EU which means we won’t be subject to tight regulation. But on the other hand, some investors, particularly those from Asia will prefer to locate in the EU.”

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