After rejection of Corporate Tax Reform III Swiss Chief Financial Officers would like to see increased tax competition by the cantons

On February 12 2017, the Swiss electorate rejected the Corporate Tax Reform III (CTR III) in its proposed form. On the occasion of the quarterly CFO Survey of Deloitte, more than 100 Chief Financial Officers (CFOs) in Switzerland were asked shortly after the vote what they now expect from a revised tax reform.

Measures expected by Swiss CFOs

Although the content of the revised legislation is currently unknown, a new version of the reform will likely entail the undisputed elements of the rejected reform. More than 100 CFOs were questioned on their priorities as to which elements should be considered in the revised tax reform so that Switzerland remains, in their eyes, an attractive business location:

  • 87% of the surveyed CFOs would like the law to grant the cantons extensive leeway for tax rate reductions.
  • 64% prefer to retain a generous tax deduction for research and development expenses.
  • 44% also see the Patent Box as a suitable measure.
  • The Notional Interest Deduction was one of the most controversial measures of the rejected reform. Only 39% of the questioned CFOs see this as a suitable measure to be considered in a new law.

What next?

Swiss CFOs now expect all the more from political stakeholders that they come up with a compatible solution and take the necessary time for it – irrespective of the EU/OECD deadline for abolishing the tax privileges of companies by 2019.

  • 59% see a legislative process in one piece to be launched as soon as possible as the most promising path. The new law should realistically come into force by 2020 or 2021.
  • Only about a third (30%) of respondents favour a two-step approach, which in a first step would abolish the tax privileges by 2019, combined with a solution for the transition, and in a second step present additional potential measures.
  • Likewise, the development of a completely new Swiss tax system (6%) or a “do-nothing” approach (6%) are basically not considered as an option.

Comments

Jackie Hess, Managing Partner, Tax & Legal at Deloitte in Switzerland, commented: «The results show that Swiss CFOs are very much interested in an immediate and viable solution at the political level. However, rash decisions and interim solutions should be explicitly avoided. Rather, a comprehensive solution should be developed, which is well balanced and backed by the majority of stakeholders.»

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Jackie Hess - Managing Partner, Tax & Legal

Jackie is the Managing Partner for Tax & Legal and a member of the Swiss Executive team. She has more than 20 years of experience serving some of Deloitte’s largest multinational clients. Her areas of focus include business model optimization in the BEPS era, Swiss ruling and tax holiday negotiations, tax controversy, and audit defense. In addition, she has extensive experience in cross-border tax planning including substance reviews, IP structuring, and finance planning. Jackie’s industry focus is life sciences where she advises predominately US-listed companies in the biotech and medtech space that have their European headquarters in Switzerland.

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Raoul Stocker_BLOG

Raoul Stocker - Partner, Business Tax Leader Zurich

Raoul Stocker is a tax partner with more than 15 years’ experience specifically in international tax litigation such as mutual agreement procedures and advanced pricing agreements. His focus lies on corporate tax planning, cross-border structuring of corporate transactions and businesses, transfer pricing as well as taxation of financial institutions. Raoul is also a lecturer of transfer pricing and tax law at the University of St. Gallen.

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Jacques Kistler

Jacques Kistler - Partner, International Tax

Jacques is the Lead Partner of our Corporate Tax service line in the French Speaking part of Switzerland, covering international tax and M&A. He has been a full time International Corporate Tax specialist for over 23 years.

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Peter Brülisauer - Partner, International Tax

Peter is a tax partner with extensive experience in advising multinational companies on tax matters. This includes corporate restructuring, acquisition, finance restructuring, IP- and R&D-planning, cross-border tax planning, tax effective supply chain management as well as function and risk allocation within multinational groups. He also specialises in permanent establishment (PE) planning as well as profit attribution between PEs. Peter is lecturer in national and international taxation at the University of St. Gallen and a frequent speaker at tax conferences. He has a PhD in Law, University of St. Gallen and is Swiss Certified Tax Expert.

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Rene Zulauf

René Zulauf - Partner, International Tax

René has more than 15 years of experience in the field of international tax structuring, financial services tax and Mergers & Acquisitions. He specializes in cross-border tax planning and has assisted numerous multinationals in particular in the establishment of Swiss finance and IP structures, as well as in the structuring of Swiss trading and principal/headquarter operations.

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