Switzerland is known for its delicious chocolate, its luxury watches—and its lightly taxed multinationals. Some 24,000 international companies are domiciled there to benefit from low-tax deals offered by its 26 cantons, which set their own rates on top of the federal corporate income-tax rate of around 8%. Zug, a canton near Zurich, alone is home to some 1,800 of them, including global commodity traders, pharmaceutical giants and a cluster of blockchain and cryptocurrency firms.
When federal and cantonal taxes are combined, Switzerland has an average effective corporate-tax rate of just under 20%, not far below Italy’s and higher than Britain’s (see chart). But sweetheart deals with cantons reduce it to as little as 9% for some big firms. That is set to change—a bit—after Swiss voters approved reforms on May 19th.