Switzerland begins work on “Tax Proposal 17”

Switzerland’s Federal Department of Finance (FDF) announced it had begun work on a new corporate tax reform proposal, which it has named “Tax Proposal 17”. The move followed the rejection of its Corporate Tax Reform III proposal by popular referendum in February.

The aim of the corporate tax reform proposal is to replace Switzerland’s existing preferential tax regimes in line with the latest international tax standards, while seeking to maintain the attractiveness and the competitiveness of Switzerland as a business location.

The rejected Corporate Tax Reform III would have reduced the headline corporate tax rate applicable to all companies and introduced a patent box regime, an R&D super deduction, a notional interest deduction on surplus equity, and tax-neutral treatment of built-in gains upon the relocation of a company to Switzerland with a corresponding step-up in tax basis.

Given the necessity of swift implementation, the timetable for Tax Proposal 17 is short. The FDF aims to submit the new proposal to the Federal Council in June for decision.