zerohedge.com / by Tyler Durden / Feb 12, 2017
In a setback for government efforts to abolish low tax rates for thousands of multinational firms while encouraging them to stay, the Swiss voted overwhelmingly against an overhaul the country’s corporate tax system. Swiss broadcaster SRF said voters rejected the tax plans by about 60% to 40%. As Reuters notes, Switzerland has been in the European Union’s firing line for years because Swiss cantons have a special tax status for foreign companies that means some pay virtually no tax other than an effective federal tax of 7.8%, an incentive to incorporate and stay on Swiss soil.
In 2014, the country agreed with Brussels to abolish this status because it allowed some foreign firms to pay far lower tax on overseas earnings – an attractive perk for around 24,000 multinationals looking to lower their tax bills, Reuters reports. To offset the introduction of higher tax rates the government proposed giving companies tax breaks on research and development in Switzerland, profits from patents developed there and deductions for excess company equity. In addition, many cantons said they would also reduce corporate tax rates for all companies to reduce the fiscal burden and dissuade multinationals from leaving.
Those backing the government say the reforms struck a balance between abolishing the tax breaks criticized by Brussels and new measures that will keep Switzerland competitive. Most Swiss citizens, however, , disagreed.