The Swiss Federal Council has asked the Federal Department of Finance to prepare a consultation on a draft tax reform package by September.
Earlier this month, the steering body tasked with drawing up “tax proposal 17” (TP17) published its recommendations. The Council said that it largely took on board the steering body’s recommendations. However, the cantons’ share of direct federal tax will be increased to 20.5 per cent, as opposed to the 21.2 per cent recommended by the steering body.
The FDF will prepare a TP17 consultation draft, based upon parameters set by the steering body. The Federal Council expects to discuss a dispatch on TP17 in the spring of 2018, together with a dispatch on proposed changes to the taxation of spouses. It will make a decision on a proposed staggered implementation schedule then.
The steering body recommended that the Federal Council:
- Abolish the special tax arrangements for cantonal status companies;
- Introduce a mandatory patent box at cantonal level;
- Limit the additional deduction for research and development costs to 50 per cent of the actual costs;
- Limit the tax relief on profits arising from the patent box and the R&D deduction to 70 per cent;
- Increase the tax rate for dividends, and set the partial taxation of dividends from qualified participations (i.e. with a minimum stake of 10 per cent) at 70 per cent at the federal level and at least 70 per cent at the cantonal and communal level; and
- Increase the cantons’ share of direct federal tax from 17 per cent to 21.2 per cent.
The Federal Council said that TP17 takes into account the rejection in February of the corporate tax reforms (CTR III) package, and respects the principle of tax federalism. It stressed that TP17 pays special attention to safeguarding the tax receipts of the Confederation, the cantons, the cities, and the commune.
The Council hopes that TP17 will help boost Switzerland’s appeal as a tax location, and restore international acceptance of the country’s tax regime.