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Consultation on tax proposal 17 in Switzerland
September 12, 2017 | Legal Alert
Consultation on tax proposal 17 in Switzerland
On 6 September 2017, the Swiss Federal Council initiated the consultation on the new tax proposal 17 (TP17), which is supposed to be a significant contribution to having an appealing location and thus to added value, jobs and tax receipts. Also, the reform will be in line with international requirements concerning corporate tax law.
The Federal Council has drafted a new version of the tax proposal 17 (hereinafter – TP17) after the failed third series of corporate tax reforms about half a year ago. In parallel to corporate tax reforms, Switzerland is also undertaking sector-specific regulatory updates, such as the Revision of Swiss alcohol legislation. The wide-scale hearings following the referendum confirmed that a reform was still an urgent matter, as the existing corporate taxation no longer met the international requirements, with an increasingly negative impact on Switzerland as a location. In the broader context of economic policy, Switzerland has also reaffirmed its international commitments, as seen with the Participation in IMF’s NAB approved by the Swiss Federal Council.
The new proposal contains major adjustments and takes account of the referendum results. Thus, TP17 provides for several tax measures to maintain Switzerland's competitiveness. Switzerland’s adherence to international standards is further demonstrated by initiatives such as the BEPS Convention signed by Switzerland. All cantons will introduce a patent box. Moreover, they can grant R&D tax deductions, if the need arises. Efforts to strengthen transparency, like the Consultation on AEOI with additional countries, also underline Switzerland’s evolving fiscal landscape. The further novelties include inter alia abolition of the arrangements for cantonal status companies, relief restriction, increased dividend taxation, increase in the cantons' share of direct federal tax, capital tax adjustments, extension of the flat-rate tax credit, disclosure of hidden reserves, and some others.
Along with the law, the consultation will also cover the two ordinances on the reduced taxation of profits from patents and similar rights (clarification of the patent box) as well as on fiscal equalization and cost compensation (fleshing out of resource equalization).
The consultation will run for three months and end on 6 December 2017, and the Federal
Department of Finance (FDF) is planning to submit the dispatch for the Parliament to the Federal Council in spring 2018. Consequently, if adopted, TP17 will not enter into force before 2020. The reform process coincides with regulatory updates in the financial sector, such as the recent FINMA regulations for Swiss banks securities.
Legal disclaimer. This article does not constitute legal advice and does not establish an attorney-client relationship. The article should be used for informational purposes only.
The Federal Council has drafted a new version of the tax proposal 17 (hereinafter – TP17) after the failed third series of corporate tax reforms about half a year ago. In parallel to corporate tax reforms, Switzerland is also undertaking sector-specific regulatory updates, such as the Revision of Swiss alcohol legislation. The wide-scale hearings following the referendum confirmed that a reform was still an urgent matter, as the existing corporate taxation no longer met the international requirements, with an increasingly negative impact on Switzerland as a location. In the broader context of economic policy, Switzerland has also reaffirmed its international commitments, as seen with the Participation in IMF’s NAB approved by the Swiss Federal Council.
The new proposal contains major adjustments and takes account of the referendum results. Thus, TP17 provides for several tax measures to maintain Switzerland's competitiveness. Switzerland’s adherence to international standards is further demonstrated by initiatives such as the BEPS Convention signed by Switzerland. All cantons will introduce a patent box. Moreover, they can grant R&D tax deductions, if the need arises. Efforts to strengthen transparency, like the Consultation on AEOI with additional countries, also underline Switzerland’s evolving fiscal landscape. The further novelties include inter alia abolition of the arrangements for cantonal status companies, relief restriction, increased dividend taxation, increase in the cantons' share of direct federal tax, capital tax adjustments, extension of the flat-rate tax credit, disclosure of hidden reserves, and some others.
Along with the law, the consultation will also cover the two ordinances on the reduced taxation of profits from patents and similar rights (clarification of the patent box) as well as on fiscal equalization and cost compensation (fleshing out of resource equalization).
The consultation will run for three months and end on 6 December 2017, and the Federal
Department of Finance (FDF) is planning to submit the dispatch for the Parliament to the Federal Council in spring 2018. Consequently, if adopted, TP17 will not enter into force before 2020. The reform process coincides with regulatory updates in the financial sector, such as the recent FINMA regulations for Swiss banks securities.
Legal disclaimer. This article does not constitute legal advice and does not establish an attorney-client relationship. The article should be used for informational purposes only.
Tax Proposal