Voters in Switzerland shocked politics by rejecting a reform plan that would bring the country’s corporate tax system in line with international standards.
The tax reforms, which are widely supported by the business community, will remove a series of special low-tax privileges that have encouraged many multinationals to set up shop in Switzerland.
Experts say the future of Switzerland’s tax system is currently unclear. The outcome of the vote could cause headaches for companies already banked in the implementation and discourage companies considering moving to the country.
“They don’t know what [tax] measures will be available… It is not a very solid basis for making investment decisions,” said Peter Uebelhart, head of tax at KPMG in Switzerland, in a video statement.
Switzerland has come under intense pressure from G20 and OECD nations in recent years to clean up its tax system. The country risks being “blacklisted” by other countries if it doesn’t change its tax system in 2019.
According to Stefan Kuhn, head of corporate tax at KPMG in Switzerland, many voters rejected the tax reform package out of concern it could reduce government revenue. That could lead to increased taxes on the middle class.
The current tax system favors some large-scale companies operating abroad. International tax authorities argue that these regulations lead to unfair subsidies for businesses.
Martin Naville, head of the Swiss-American Chamber of Commerce, said it’s possible voters didn’t understand the intricacies of the reforms. These measures were rejected by 59% of voters.
“I think it’s been a very bad day for Switzerland,” Naville said. “Clearly, uncertainty and trustworthiness in the Swiss [system] achieved a great success. ”
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Swiss authorities have said they will soon introduce an amended tax reform proposal. Naville said he expects the new rules to be in place within the next few months.
“It is now up to all stakeholders to develop an acceptable competitive tax system and regain the credibility associated with the famous political stability that has given Switzerland a favorable position.” such benefits,” he said in a statement.
Naville hinted that potential tax reforms in the US and UK could tempt Switzerland-based companies to relocate, putting more pressure on the Swiss tax base.
CNNMoney (London) First published February 13, 2017: 10:10 AM ET
https://money.cnn.com/2017/02/13/pf/taxes/switzerland-tax-referendum-vote/index.html?section=money_news_international Swiss voters reject corporate tax overhaul