| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

Home 
 
 News
 Irish
 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 International
 Property
 Innovation
 
 Analysis/Comment
 
 Asia Economy

RSS FEED


How to use our RSS feed

Follow Finfacts on Twitter

 
Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.

Welcome

Finfacts is Ireland's leading business information site and you are in its business news section.

Links

Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax - Income/Corporate

Global News

Bloomberg News

CNN Money

Cnet Tech News

Newspapers

Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News

 

Feedback

 

Content Management by interactivetools.com.

News : Global Economy Last Updated: Sep 26, 2014 - 7:28 AM


Swiss Cabinet presents plans for corporate tax reform
By Urs Geiser, swissinfo.ch
Sep 25, 2014 - 7:45 AM

Email this article
 Printer friendly page

Finfacts: The Swiss tax system mirrors Switzerland’s federal structure, i.e. income/ corporate taxes are levied at federal, cantonal and communal level (26 cantons – 26 tax laws). While foreign holding companies and other entities have low digit tax rates, KPMG estimates [pdf] that the average standard corporate tax rate is 17.92% while the standard VAT rate is 8%,

The Swiss government wants to abolish controversial tax privileges for international firms and introduce a royalty box and an interest-adjusted profit tax. Presenting the Cabinet’s draft proposals, Finance Minister Eveline Widmer-Schlumpf said the aim of the reform is to adapt the fiscal policy to international standards, boost Switzerland’s competitive edge as an attractive business location and encourage companies to continue to make an important contribution to funding the tasks of the government, cantons and local authorities.

She acknowledged that the project, launched in 2008, is highly complex and challenging, but said it also represents a great opportunity.

“It is a chance to define a set of regulations that are accepted and create the preconditions for a competitive tax system,” she told journalists at a news conference on Monday.

Switzerland has been under pressure from the Organisation for Economic Co-operation and Development (OECD) and the European Union for the past ten years to review its preferential corporate tax policy.

About 25,000 firms - - holding companies, mixed companies and management companies - - are granted special tax breaks by Switzerland’s 26 cantons. The firms are either exempt from tax or subject to lower rates for the activities they engage in outside the country.

Royalty box

A key pillar of the reform is the introduction of so-called royalty boxes - - a method of preferential tax treatment for certain types of profits, notably royalties from a patent.

The OECD is due to define the legality of royalty boxes by the end of next year amid calls to abolish their use.

But Widmer-Schlumpf is confident that the practice will not be scrapped as Britain, Luxembourg and Belgium are defending their corporate fiscal regimes.

“The question is not whether royalty boxes will continue to exist or not. The question is how they will be defined. Switzerland might have to adapt its law accordingly,” she said.

Adrian Hug of the Federal Tax Authorities hinted that Switzerland could maintain its corporate tax system for a while if the international community needs more time to find a consensus.

Widmer-Schlumpf maintained that Switzerland has to act now to give investors the necessary legal security.

“Many international companies would leave Switzerland,” she warned.

The planned reform is expected to lead to a shortfall in revenue to the tune of CHF1.7 billion ($1.8 billion) annually for the federal authorities. The finance ministry plans to offset the costs without spending cuts but by introducing a capital gains tax on securities. It also suggests increasing the number of federal tax inspectors from about 300 to about 370.

The overhaul of corporate taxes also has a major impact on the fiscal rates of the country’s largely autonomous 26 cantons and on the system of financial payments between rich and less affluent cantons.

Reaction

Cantons, political parties and other organisations now have until the end of next January to respond to the white paper as part of a regular consultation process.

Widmer-Schlumpf says the Cabinet will present a bill to parliament next summer. She hopes a first reading of the amended law will be tabled within 12 months.

In a first reaction, the Swiss Business Federation welcomed the government proposal as an important signal for a strong business location and continuing legal security.

In its statement, the Trade Union Federation criticised a proposed reduction in taxes for employers and shareholders.

For the centre-right Radical Party it is crucial to limit the planned reform to a minimum and prevent a mass exodus of international companies from Switzerland.

The centre-left Social Democrats are more positive about the reform. They praise it as an attempt to tackle what they consider unjustified tax privileges, but warn that revenue from a planned capital gains tax might not be sufficient to cover other shortfalls.

For its part, the rightwing Swiss People’s Party says the reform is premature, as the international community has not yet agreed the terms of a tax regime to prevent companies from shifting their taxable profits from the place of actual business activity to other locations with more favourable tax rules.

Related tax links

G20 finance ministers reaffirm commitment to tax reform; Ibec takes Finfacts' advice

OECD & Tax: Everything grand in Ireland's Republic of Spin?

OECD proposes biggest reform of global business tax rules since 1920s

Finfacts submission to Department of Finance consultation on corporation tax reform

OECD BEPS Project submission from Finfacts: Ireland should embrace corporate tax reform - - includes analysis of underperforming indigenous tradable sector.

Irish corporate tax policy like property bubble driven by short-term interests

IMF explains “Double Irish Dutch Sandwich” tax avoidance

US company profits per Irish employee at $970,000; Tax paid in Ireland at $25,000

Estonia heads OECD tax competitiveness index; Ireland at 15, US at 32


© Copyright 2011 by Finfacts.com

Top of Page

Global Economy
Latest Headlines
Strong Swiss franc gloom deepens for exporters
Global investors shift focus to China; EM outflows surge to $1tn in 13 months
Global oil glut will continue into 2016
Stable growth momentum in OECD area but slowing expected in China
Prices for major food commodities in July lowest since September 2009
Global manufacturing in July weakest level in two years
US, China and UK lead top 25 target countries for foreign direct investment
Budget surpluses rare in developed countries from 1980s; Italy, France, Greece had none in 60 and 40 years
Singapore, London and Shanghai top cities for new FDI projects in 2014; Dublin in 11th place
Exchange rates shuffle as Dublin ranked 49th most expensive city; Paris at 46; Berlin at 105
Western consumer groups under pressure in China and India
Developing countries facing “structural slowdown” likely to last for years
OECD BEPS Tax Project: Amazon books UK sales in UK; Australia proposes up to 100% in penalties
Emerging Markets Index falls to 12-month low in May as manufacturing contracts
US and world economies slowing in 2015 — OECD
Global manufacturing production rose slightly in May; Trade flows weak
GDP growth in OECD area slowed to 0.3% in the first quarter of 2015
Only one quarter of workers worldwide have stable employment contracts
Automatic Exchange of Tax Information: OECD says countries won't be able to game system
Gates Foundation loses in Swiss family's shares coup
Minimum wage levels in OECD countries
Brent oil benchmark over $68 a barrel - up almost 50% in 2015
Global growth slows and manufacturing dips to 21-month low
Family-controlled firms dominate European business
Top 10 of world’s 250 largest consumer products companies account for 30% of sales
Nine of world's 20 fastest growing economies in Africa
Globalisation maybe stalling as trade growth remains weak
Global growth prospects uneven across major economies says IMF
Emerging markets growth lowest since 2009; Global growth at 30-year average
China's economic rebalancing hitting Latin American economies
New York, London, HK & Singapore top global financial centres index; Dublin recovers
Global growth in modest expansion from low oil prices/ monetary easing says OECD
Composite leading indicators point to positive change in growth momentum in the Eurozone
Global labour market trends portend paradise for some but uncertainty for many workers
Vienna remains top of World Quality of Living Rankings in 2015; Dublin at 34
Zurich and Geneva overtake Singapore to become world's most expensive cities
HSBC Switzerland and Falciani: How it happened
Global economic power to continue shift from advanced economies
Global food price index falls in January; Cereal output set for record
Global debt has risen $57tn or 17% of world GDP since 2007