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Swiss Report Champions Simplified VAT

by Ulrika Lomas,, Brussels

25 December 2013

Swiss business federation Economiesuisse has welcomed the findings of a Federal Council report extolling the merits of a simplified value-added tax (VAT) system for the Confederation.

In its publication, the Federal Council provided a comprehensive assessment of costs arising for companies in Switzerland from state regulation. The study contains key statistics, as well as a raft of interesting proposals, advocating how the regulatory burden could be reduced.

According to the report, of the total regulatory burden on businesses of CHF10bn (USD11.2bn), CHF1.8bn is directly linked to VAT. The Federal Council emphasized that a simplified VAT system with a uniform tax rate and as few tax exemptions as possible would give rise to potential savings of several hundred million Swiss francs.

Underscoring that this figure is a considerable amount, Economiesuisse made clear that such a saving would dramatically reduce the fiscal burden on companies in Switzerland, without leading to a revenue shortfall for the Confederation.

Swiss industry, and in particular Swiss business federation Economiesuisse, has long since been calling for a simple, modern, VAT system, and not only as part of efforts to lower the weight of the regulatory burden.

Switzerland levies three rates of value added tax; a headline 8 percent rate, a reduced rate of 2.5 percent and a special 3.5 percent rate for hoteliers. At the end of September, the Swiss National Council rejected proposals aimed at reviewing the nation's VAT rates, and unifying the two reduced rates of VAT. Under the rejected package, the headline rate would have remained unchanged but the two lower rates would have been amalgamated into a single rate in the range of 2.8 percent to 3.8 percent.

Insisting that plans to introduce a uniform VAT rate are far from buried, Economiesuisse maintains that if the Federal Council's report on regulatory costs were brought to the discussion table, the findings would give a much-needed boost to the campaign in favor of a simplified VAT system.

Alongside a review of existing exemptions, the National Council had been asked to consider extending the new reduced rate to restaurants who face an 8 percent rate on their services while takeaway food is subject to tax at 2.5 percent.

TAGS: Finance | VAT rates | tax | business | value added tax (VAT) | interest | law | food | Switzerland | tax breaks | tax reform | regulation | services

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