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The European Council has urged Switzerland to take swift action to reform its corporate tax system in the wake of last month's referendum result.
Last month a Swiss referendum rejected the Corporate Tax Reform III package, which proposed the abolition of certain reduced taxation arrangements for holding, domiciliary, and mixed companies.
The Swiss Federal Council has instructed the Federal Department of Finance to prepare the "substantive parameters" for a new proposal by mid-2017 at the latest. The Council still intends to abolish the special arrangements for status companies.
On February 28, the European Council adopted 12 conclusions on the EU's relationship with Switzerland. The Council noted the referendum result and, in stressing "the need for fair competition," encouraged Switzerland "to adhere to its international commitments."
The Council added that Switzerland should "look for alternative solutions to effectively and swiftly remove the five tax regimes concerned, in line with the 2014 Joint Statement between EU member states and Switzerland on company tax issues."
The statement, signed in October 2014, outlined Switzerland's intention to abolish: the cantonal administrative company status, the cantonal mixed company status, the cantonal holding company status, Circular Number 8 of the Federal Tax Administration on principal structures, and the current practice of the Federal Tax Administration regarding finance branches.
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