Swiss Voters Reject Corporate Tax Reform III In Popular Referendum

Author:Mr Jurgen Borgt
Profession:TMF Group
 
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On 12 February 2017 a majority 59.1% of Swiss voters rejected Corporate Tax Reform III (CTR III), which will lead to a redrafting of the original proposal.

Background

The draft Corporate Tax Reform proposal was published by the Federal Council on 5 June 2015. Following discussion, Federal Parliament approved the bill for CTR III on 17 June 2016, and it was subject to a popular referendum on Sunday 12 February 2017.

Impact

The 59.1% rejection of CTR III by Swiss voters will result in a delayed implementation, as the proposal must now be redrafted. It's possible the delay will have a knock-on effect with the European Union, OECD and maybe even a number of bilateral relationships, as Switzerland was expected to abolish its preferential tax regimes by 31 December 2018.

Theoretically, it may still be possible to meet this date, but the consensus appears to be that the CTR III project will now be delayed by two to three years.

Reason(s) for rejection

It would seem that the introduction of the notional interest deduction and partial taxation of dividend income for individuals were the main drivers for the rejection of CTR III by Swiss voters. This, combined with the Swiss tax payer having to pay the shortfall in tax revenue, according to CTR III's opponents, seems to have dealt a decisive final blow.

Whatever the reasons for the rejection, all do seem to agree that reform of the Swiss tax system is required; particularly with regard to the difference in taxation between foreign and Swiss...

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