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Debate Continues Over Swiss Corporate Tax Review

by Ulrika Lomas, Lowtax.net, Brussels
14 March, 2014

Swiss business federation Economisuisse has called on the Government to reach a rapid agreement on the third reform of corporate tax (Unternehmenssteuerreform III,) to revise cantonal tax breaks to ensure their acceptance at EU level.

Economisuisse said the reform is key to restoring Switzerland's attractiveness as a business location. In contrast, the executive in the Swiss canton of Bern has warned that the overhaul should be postponed.

Switzerland is under pressure from the European Union (EU) to make changes to its corporate tax rules, specifically in relation to cantonal tax breaks benefiting primary holding, administrative, and mixed companies. This model is no longer accepted at EU level.

Switzerland's third reform of corporation tax seeks to gain international acceptance for this tax system. A steering committee heading up the reform submitted its report and vision for change in December last year.

Responding to the steering committee's proposals, Economiesuisse said that, while it supports idea of a cantonal licence box, which would grant preferential tax treatment to income derived from intellectual property (IP) rights, it favors the introduction of an innovation box instead. This alternative regime would apply reduced rates of tax to income from IP rights as well as to income from qualifying research and development activities.

Bern's executive said that it recommends a licence box regime limited exclusively to patents. The canton warned that replacing Switzerland's existing special tax regimes with new corporate tax breaks carries the risk of further international criticism.


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