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Swiss reject corporate tax reforms

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Switzerland has voted decisively in a referendum on 12 February to reject government proposals for reforms designed to make its corporate tax system compatible with the country’s international obligations under the OECD’s BEPS rules from 2019.

The reforms were, in the government’s words: ‘designed to increase international acceptance of the Swiss corporate tax system and guarantee competitive tax rates’. The reduced system of taxes available to multinational ‘status companies’ in Switzerland would have been abolished. In its place, the government offered tax relief for research and development and a form of patent box regime. Many who opposed the reforms feared that taxpayers would have to make up for the resulting shortfall in revenues.

Swiss finance minister, Ueli Maurer, expressed the government’s concerns that companies could now face a long period of uncertainty and some might leave or decide to set up elsewhere. Switzerland is committed to bringing its tax system into line with international standards under BEPS by 1 January 2019.  This gave the country very little room for manoeuvre, Maurer said. The government would seek urgently to find an alternative acceptable to the country’s voters, but he was pessimistic about the prospects for agreeing a new set of proposals with the cantons in the two years available.

Heather Self, tax expert at Pinsent Masons, commented: ‘the rejection of the proposals shows that implementing BEPS is going to be very difficult in practice, particularly for those countries where the government needs voters’ approval to update the tax system’. Switzerland’s difficulties ‘pale into insignificance compared to the hurdles ahead in the US’, Self added, where it will be much more difficult to predict whether tax reforms will comply with BEPS. 

Issue: 1342
Categories: News