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Swiss Finance Directors Push For Corporate Tax Reform

by Ulrika Lomas, Tax-News.com, Brussels

10 February 2014


The Swiss Conference of Cantonal Finance Directors (FDK) has underlined the importance of plans to reform the corporate tax system (Unternehmenssteuerreform III), and has put forward its preliminary recommendations.

Outlining its position, the FDK conceded that a reform of the Confederation's corporate tax law is vital for Switzerland as a small and open economy, in the light of international developments, and the need to therefore gain acceptance for the tax regime.

According to the FDK, a number of tax measures should be swiftly implemented within the framework of the reform, and so-called "patent boxes" introduced as a matter of priority. In addition, cantonal profit tax should be reduced – if the cantons deem such cuts necessary.

To ensure that the cantons are able to cope with the enormous fiscal challenges, the FDK urged the Federal Government to assume at least 50 percent of the costs of the reform.

Concluding, the FDK made clear that the aim of the corporate tax reform is not to reduce taxation, but to reshape the corporate tax system. To renounce such an important reform would be to endanger jobs and to risk greater revenue losses, the FDK stressed, warning that to do nothing would prove more expensive.

Echoing this view, Swiss business federation Economiesuisse emphasized that the third reform of corporation tax will serve to ensure good framework conditions for internationally active businesses in the Confederation. Arguing that this is vital, above all for fiscal reasons, Economiesuisse pointed out that revenues flowing from the taxation of international companies have been rising sharply over the course of the last few years.

Despite the privileged taxation of international companies, they are nevertheless a key source of income for the state, the body maintained, noting that since 1990 income from international businesses headquartered in Switzerland has quadrupled, while income from individual income tax has only doubled over the same period.

Economiesuisse insisted that without this dramatic growth in profit tax income from multinationals, the Government would not have been able to implement tax cuts for individuals (married couples and families) in the last few years. Furthermore, the estimated 150,000 employees from these companies contribute a significant amount in income taxes to both the Swiss cantons and the Government, the organization added, alluding to the fact that even fiscally weaker cantons reap the benefit in the form of financial equalization payments.

The Swiss Federal Council is due to adopt the cornerstones of the corporate tax reform in the spring, before subsequently presenting a consultation bill in the summer.

TAGS: individuals | Finance | tax | business | law | employees | corporation tax | multinationals | transfer pricing | Switzerland | tax breaks | tax reform | individual income tax

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