Swiss voters reject corporate tax overhaul
The tax reforms, widely supported by the business world, would have removed a set of special tax privileges that had prompted many multinationals to settle in Switzerland.
Experts believe that the future of the Swiss tax system is not yet clear. The result of the vote could create headaches for companies that were counting on their implementation and deter companies that were considering setting up in the country.
“They don’t know what [tax] measures will be available … It is not a very solid basis for making investment decisions, “said Peter Uebelhart, tax manager at KPMG in Switzerland, in a video statement.
In recent years, Switzerland has come under heavy pressure from the G20 and OECD countries to clean up its tax system. The country risks being “blacklisted” by other countries if it does not change its tax system by 2019.
Voters in Switzerland shocked the political establishment by rejecting a reform plan that would have aligned the country’s corporate tax system with international standards.
Many voters rejected the tax reform package for fear it would reduce the amount of government revenue, according to Stefan Kuhn, head of corporate tax at KPMG in Switzerland. This could have led to higher taxes on the middle class.
The current tax system grants preferential treatment to certain companies with large operations abroad. International tax authorities argue that the rules constitute unfair subsidies to businesses.
Martin Naville, head of the Swiss-American Chamber of Commerce, said voters may not have understood the complexity of the reforms. These measures were rejected by 59% of voters.
“I think it was a very bad day for Switzerland,” said Naville. “Clearly, the uncertainty and credibility of Switzerland [system] took a huge hit. ”
Swiss authorities say they will act quickly to create an amended tax reform proposal. Naville said he hopes new rules will be developed in the coming months.
“All stakeholders must now take responsibility for developing an acceptable competitive tax system and regaining credibility regarding the famous political stability that has given Switzerland such an advantageous position,” he said in a statement.
Naville hinted that potential tax reforms in the United States and the United Kingdom could encourage Swiss-based companies to relocate, which would put further pressure on Switzerland’s tax base.