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Swiss gov’t pushes for adoption of tax overhaul

Swiss gov’t pushes for adoption of tax overhaul

ZURICH: Swiss Federal Council has said that corporate tax reform is now urgently needed, with the Government hopeful that the first reforms could enter into force in 2019. The Federal Council met on January 10 to discuss the progress made on tax proposal 17 (TP17). In particular, ministers discussed the main findings of a consultation on TP17. The Federal Council said that participants in the consultation recognized the need for action. However, it also explained that the consultation “showed that the proposal will remain demanding politically.” The Council noted that, for the measures to be agreed to by a substantial majority, and for Switzerland’s competitiveness to be maintained, a “high degree of willingness to compromise on the part of all parties concerned is indispensable.” The Federal Department of Finance (FDF) will continue talks with the cantons, communes, political parties, and other interested parties. The FDF will submit a dispatch on the proposals to Parliament this spring. The Federal Council hopes that the parliamentary debate on the measures will be concluded as early as the 2018 autumn session. If a referendum is not called, the first TP17 measures could enter into force at the beginning of 2019, with the remainder entering into force in 2020. Under TP17, the special arrangements for cantonal status companies will be abolished, and the cantons will be required to introduce patent box regimes, with the option of introducing additional tax deductions for research and development activities. Swiss operating companies of foreign companies will be entitled to a flat-rate tax credit, and the dividend taxation for “natural persons” will be increased to 70 percent at federal and cantonal level. Companies that relocate their headquarters to Switzerland will be able to benefit from additional amortization in the first “few” years of operations. The Federal Council said that the international trend toward lower corporate taxes has made the need for action still more urgent. It added that TP17 will be an effective way of ensuring that Switzerland remains a competitive location.