Switzerland to Approve Tax Reform Through Vote

Around two-thirds of voters in Switzerland are seemingly positive and are in approval of the country’s corporate tax system. The finance minister labeled this as an existential threat to the country’s role as a business hub. 

According to a poll published on Friday by Tamedia, nearly 62 percent of respondents have approved, and are likely to do so as well in the official tax reform and pension finance referendum on May 19. This means a long-running unopposed tax rates for multinational corporations in Switzerland might soon be abolished.

“Acceptance is vital to prevent the country being branded a low-tax pariah,” Finance Minister Ueli Maurer said.

"For Switzerland's position as a business location, the tax proposal is existential. If we say 'no' for a second time we can't correct that again," Maurer said in an interview published on Friday.

The European Union (EU) and the Organization for Economic Cooperation and Development (OECD) has put Switzerland under pressure, which in turn, had the Swiss to promise to meet international standards. The move is focused on eliminating special low tax rates that benefit foreign companies based in the country.

The government of Switzerland now plans to disregard and completely abolish special taxes, which could go for as low as 8 to 12 percent as opposed to the normal 12 to 24 percent tax, for these companies, most of which being foreign.

Cantons of Switzerland will lower their tax rates for “normal” companies to prevent them from backing out and leaving completely.

The federal government will increase shares of federal tax that cantons get to cover the loss in revenue, as a result of the tax reform, which amounts to around 2 billion Swiss francs ($2 billion).

"A country that twice rejects necessary tax reforms loses trust," Maurer added.

"It would simply mean that Switzerland is not a country of the future. Of course, we could do a repair job and come up with another plan, but that wouldn't help much."


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