A consultation has revealed widespread support for a corporate tax reform plan, proposed last fall, to abolish the cantonal tax statuses for holding, domiciliary, and mixed companies, and to introduce a royalty box, Switzerland’s Federal Council said in an April 2 release. Some modifications to the reform proposals will be required, though, the government said.
The current cantonal tax arrangements no longer meet international tax standards, so the reform is needed to maintain Switzerland’s competitiveness as an international location for corporations, the Council said.
The Council also said that as a result of the consultation, it concluded that the cantons should be permitted to allow companies greater deductions for research and development expenditures.
Further, because of the “clear results of the consultation” the Federal Council said it will refrain from proposing to tax capital gains. The Council will also no longer pursue a proposal to introduce an interest-adjusted profit tax.
A proposal to abolish the issue tax on equity capital as well as comprehensive rules for the disclosure of hidden reserves were accepted, while proposed changes to the participation deduction and the offsetting of losses were rejected, the Council said.
It was agreed that if a canton decides to reduce its general profit tax, the goverment would shoulder 50 percent of the cost.
The government will prepare legislation for Parliament consideration by June 2015.
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