• Register
Return to: Home > News > Regulation > Swiss vote against tax reform

Swiss vote against tax reform

In a referendum on Sunday, around 59% of Swiss voters chose against the plans for corporate tax reform.

The reforms would have cost around €1bn in total and kept corporate tax rates low but abolished special treatment for multinational companies.

Currently Switzerland grants special status to foreign firms which allowed cantons, or districts, to offer them lower rates of tax than domestic firms, making Switzerland an attractive destination for foreign investors.

As part of the reforms, the government would offer new tax breaks for research and development and other activities. Additionally, Switzerland’s cantons (regions) planned to lower their tax rates across the board.

Richard Murphy, professor of practice in international political economy at City University London wrote on his blog: “The proposed bill will allow patent boxes, reduced dividend taxation, 150% deduction of R&D expenditures and a new system of notional interest deduction among others. The result: an unknown amount of tax income reduction.  But the accumulation of all these measures will make Switzerland again a paradise for profit shifting international companies.”

The Swiss government had hoped to secure the approval to keep the country’s practices in line with international standards to keep tax rates globally competitive. The reforms were backed by two chambers of the Swiss parliament, the government, and opposed mostly by left wing parties. The government now has to draw up new plans to abolish the low tax rates for thousands of multinational holding companies.

The defeat is a blow for business, which fears damaging uncertainty, and companies could quit Switzerland or no longer move business there. The Swiss Social Democratic party argued that the new system would have been too generous to business and led to large gaps in regions’ budgets, which would have hit public services.

Switzerland's finance minister, Ueli Maurer, has expected that it will take “at least a year” to draw up an “urgently needed” revised reform package, with legislative approval to follow. Yet, opponents argued that the reforms could be modified “relatively easily” according to media reports.

“Switzerland’s partners expect that it will implement its commitments in a reasonable timeframe,” Pascal Saint-Amans, head of tax at OECD, said. Switzerland has made a commitment to reform by 2019 and international organisations such as the OECD deemed the system unacceptable.

Reform supporters stated that jobs and investment would be boosted by securing the country’s competitiveness.

Jan Schüpbach, economist at Credit Suisse, said: “Switzerland has promised to abolish the special status [of many multinationals]. What actually happens will depend on whether there is international pressure on companies.”

Murphy wrote: “I call this a win for tax justice. Now Switzerland has to come up with new tax laws that suit its people as well as the interests of big business. If only other countries had to do the same thing we might all be in a better place.”

Top Content

    South Africa: sensing new opportunities

    It has been an interesting couple of years for the profession in South Africa. A number of high-profile scandals have brought the profession and the role of auditors into sharp public focus, brewing a distrust towards accountants and a large expectations gap. Joe Pickard reports.

    read more

    Ghana: a quest for consistency

    Ghana’s current economic profile would suggest a fertile landscape for purveyors of accounting services. But inconsistent approaches to compliance and application of standards – coupled with problems in the banking sector and consequent liquidity constraints – have created a challenging environment. Paul Golden writes.

    read more

    Drone technology: audit takes to the skies

    The movement towards a digitised era has already impacted the auditing profession in a number of ways, from blockchain to artificial intelligence. Now firms are taking to sky and using drone technology in their audits. Mishelle Thurai speaks to Big Four firms to find out more.

    read more

    SBC: a new alliance joins the market

    Jonathan Minter speaks to Paul Tutin, chair of founding firm Streets Chartered Accountants, about why the business and its European partners took the decision to launch their own association.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.