Switzerland Adopts New Corporate Tax Reform
The Swiss corporate tax legislation has reached its third reform and new amendments were brought to the Corporate Reform Act, the Federal Council announced. The document called the “Corporate Tax Reform Act III” (CTR III) will help the country to attract more foreign investors and ensure Swiss companies will pay the correct tax contributions.
The Swiss Corporate Tax Reform Act III
The Federal Council has agreed upon the new taxation measures that will turn Switzerland into a more attractive business location. A new program called the “Federal Act on Tax-Related Measures to Strengthen the Competitiveness of Switzerland as a Business Location” was also discussed at the beginning of April and introduced in the CTR III. The Federal Council is confident the new dispatch would turn the business environment into a competitive one and the companies carrying out business activities in Switzerland would benefit from more transparency while paying their cantonal taxes. The new reform also ensures a better autonomy for the cantonal fiscal policies. The cantons will be allowed to decrease corporate income tax rates. The dispatch also contains other measures among which the dissolution of the stamp duty. Swiss cantons will also be allowed to establish new capital tax reductions on participations.
A few cantons have already announced a decrease in the corporate tax, but for more accurate information about the current tax rates you may ask our Swiss lawyers.
Other measures provisioned by the Swiss CTR III
Other than taxation issues, the new Corporate Tax Reform Act also provisions the creation of a patent box for the cantonal taxes that would provide preferential tax treatment from the revenue generated by patent, trademark registration within Swiss cantons, but also from rights arising from research and development programs. Swiss cantons will be given the option to apply for higher deductions for research and development expenditures, but will also be allowed to establish capital tax deductions. At the same time, the tax on equity capital will be repealed. The Swiss dividend tax applied at cantonal level will also be levied at 70% in order to prevent double taxation of both dividends and profits. The last provision of the CTR III establishes an increase in cantons’ share of direct federal tax from 17% to 20.5%. The new reform will be introduced gradually into the tax legislation between 2017 and 2019.
For information about the current taxation legislation, please contact our Swiss attorneys.