Most Read Contributor in Switzerland, February 2017
This weekend, voters in Switzerland derailed a comprehensive
corporate income tax reform in a popular referendum with close to
60 percent. The corporate income tax reform also failed to gain a
majority with the cantons (states), as only four cantons voted in
favor, and of some of the larger cities in the country (in
Following almost five years of legislative efforts to bring
Switzerland's corporate income taxes in line with international
standards by abolishing the no longer acceptable tax privileges for
its holding and special tax status companies (the latter tax status
basically meant no or only partial taxation of foreign-foreign
sales of so-called domicile and administrative companies), the
corporate income tax reform would have replaced these income tax
privileges with a lower universal income tax rate applicable to all
companies, by introducing in favor of the Swiss pharmaceutical
industry a so-called patent box regime excluding mainly patent
licensing income including a R&D super deduction of 150
percent, and - in favor of the Zürich financial industry - a
notional interest deduction on surplus equity (and some further
income tax alleviations).
A coalition of the Social Democrat Party, the Greens, trade
unions, and church leaders (which all were supported in the last
days of the campaign by Former Finance Minister Eveline
Widmer-Schlumpf) argued that the proposed corporate income tax
reform would have driven down tax revenues by CHF 2.7 billion each
year, and that the "Mittelstand" would have to pay for
this shortfall in the middle and long run through increased income
tax and by cutting on public services.
The negative referendum comes at at time where Switzerland's
federal government, all pro-business political parties and the
country's business community wanted to present Switzerland to
its European neighbours and the rest of the world as a continuingly
attractive place for foreign investments. There is a consensus
within Switzerland that a new bill must be passed rather quickly
which will most probably contain the more or less same package of
income tax privileges for the country's pharmaceutical and
financial industry and at the same time one or more
"sweeteners" for the stakeholders on the left side: a
long desired topic on the leftist agenda is thereby a private
capital gain tax.
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