Swiss Corporate Tax Reform (Tax Proposal 17) IFA RUSSIAN - - PowerPoint PPT Presentation

Federal Tax Administration FTA

Swiss Corporate Tax Reform 


(Tax Proposal 17)

IFA – RUSSIAN INTERNATIONAL TAXATION WEEK Financial University, Moscow, 10 April 2018

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Federal Tax Administration FTA

Claude Grosjean, lic. iur., Attorney-at-law Deputy Head Tax Legislation Division

1. Why? International Context and Domestic Background 2. How? Goals and Strategy 3. What? Key Measures of the Reform 4. Who? Rate Reduction on Cantonal Level 5. When? History and Outlook

Swiss Corporate Tax Reform – Tax Proposal 17 (TP17) 


Overview

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Federal Tax Administration FTA

Claude Grosjean, lic. iur., Attorney-at-law Deputy Head Tax Legislation Division

Key aspects of domestic background

• Economic and fiscal importance of

corporate taxes for Switzerland

• Fiscal federalism, tax competition between

cantons and financial transfer system

• Impact of international developments

Swiss Corporate Tax Reform – Tax Proposal 17 (TP17)


Why? International Context and Domestic Background

Tax reforms in various jurisdictions

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Federal Tax Administration FTA

Claude Grosjean, lic. iur., Attorney-at-law Deputy Head Tax Legislation Division

Swiss Corporate Tax Reform – Tax Proposal 17 (TP17)


How? Goals and Strategy
 
 


Competitive tax burden International acceptance Tax yield area of tension

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Federal Tax Administration FTA

Claude Grosjean, lic. iur., Attorney-at-law Deputy Head Tax Legislation Division

Swiss Corporate Tax Reform – Tax Proposal 17 (TP17)


How? Goals and Strategy
 
 


Goal Action International acceptance • Abolish cantonal tax regimes Competitive tax burden

• Combination of new tax regimes and statutory rate

reductions on cantonal level Tax yield

• Targeted new tax regimes to limit statuary rate

reductions

• Increase in partial dividend taxation
• Limitation of overall tax relief
• Raise the cantons' share of direct federal tax

revenue

• Adjustments to fiscal equalization

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Federal Tax Administration FTA

Claude Grosjean, lic. iur., Attorney-at-law Deputy Head Tax Legislation Division

Swiss Corporate Tax Reform – Tax Proposal 17 (TP17)


What? Abolish Cantonal Tax Regimes

• Holding companies: basically long

term holding and managing of financial interests.

• Management companies: no

commercial activity in Switzerland just management functions (domiciliary companies).

• Mixed companies: only

subordinated commercial activities in Switzerland. No tax status on Federal level.

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Federal Tax Administration FTA

Claude Grosjean, lic. iur., Attorney-at-law Deputy Head Tax Legislation Division

Swiss Corporate Tax Reform – Tax Proposal 17 (TP17)


What? Patent Box

Design according to Federal Council:

• nly domestic R&D (in line with

OECD-standards)

• focus on patents
• mandatory for the cantons

Maximum scope according to OECD-standard Amount of tax relief Definition of qualifying IP 100 % Software Patents Non- patented innovations 
 by SMEs

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Federal Tax Administration FTA

Claude Grosjean, lic. iur., Attorney-at-law Deputy Head Tax Legislation Division

Swiss Corporate Tax Reform – Tax Proposal 17 (TP17)


What? R&D Super Deduction

Design according to Federal Council:

• definition of R&D according the

Federal Act on the Promotion of Research and Innovation

• focus on personnel expenses

plus uplift (35 %)

• ptional for the cantons

Amount of additional deduction Definition of R&D 100 % Applied research Basic research 50 %

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Federal Tax Administration FTA

Claude Grosjean, lic. iur., Attorney-at-law Deputy Head Tax Legislation Division

Paten t box R&D Super Dedu c- tions At least 30 %

• f

profit to be taxed

Swiss Corporate Tax Reform – Tax Proposal 17 (TP17)


What? Limitation of Overall Tax Relief

Design according to Federal Council:

• new tax regimes shall not result

in a zero taxation

• mandatory for the cantons

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Federal Tax Administration FTA

Claude Grosjean, lic. iur., Attorney-at-law Deputy Head Tax Legislation Division

Swiss Corporate Tax Reform – Tax Proposal 17 (TP17)


What? Dividend Taxation

Design according to Federal Council Partial taxation of dividends

• applies to individual shareholders holding a participation of at least 10 % in a company
• taxation
• on federal level = 70 %
• on cantonal level ≥ 70 %

Investment deductions for holdings: no changes planned

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Federal Tax Administration FTA

Claude Grosjean, lic. iur., Attorney-at-law Deputy Head Tax Legislation Division

Swiss Corporate Tax Reform – Tax Proposal 17 (TP17)


Who? Rate Reductions on Cantonal Level (not part of TP 17)

• Direct Federal Tax on profit = 8,5 %

(effective 7,8 %)

• Overall tax burden on profit in cantonal

capital (federal, cantonal and municipal taxes)

• Today:
• 12.3 % (LU) – 24.2 % (GE)
• Lower with cantonal tax regimes
• from 2020 earliest (prov.):
• 12.1 % (ZG/NW) – 18.2 % (AG)

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Federal Tax Administration FTA

Claude Grosjean, lic. iur., Attorney-at-law Deputy Head Tax Legislation Division

• 12th February 2017: Swiss voters reject Corporate Tax Reform III

(CTR III)

• 2017: preparation of the new tax reform Tax Proposal 17 (TP17)
• March 2018: Federal Council submited draft legislation to

parliament

• 2018: debate in parliament
• 2019: potential popular vote
• 2020: earliest date of entry into force

Swiss Corporate Tax Reform – Tax Proposal 17 (TP17)


When? History and Outlook

Federal Tax Administration FTA

Thank you!
 
 Questions? Discussion?