Swiss VAT might rise to fund lower company tax rates

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Historically, Switzerland has offered certain foreign companies special preferential tax deals in order to attract them.

In response to international pressure, the current system is to be phased out replacing preferential tax rates with lower universal ones in the hope that these companies will stay.

The central challenge is how to cover the tax revenue lost when companies taxed at the main rate switch to new lower universal tax rates. The federal government plans to help cantons fill tax revenue gaps, but the money has to come from somewhere.

A reform plan, put to a federal vote in February 2017, was rejected by 59.1% of voters. This sent the federal government back to the drawing board.

Many ideas have been kicked around. One, to increase social security taxes, was rejected by a commission by 13 votes to 9, according to 20 Minutes.

Some proposals for filling the corporate tax reform revenue gap have been mixed with pension reform. The commission voted 13 to 9 deal with these two issues separately.

Last week, a parliamentary commission proposed funding corporate tax reform with a VAT increase – Switzerland’s main VAT rate is currently 7.7%. The economy commission will now look at this idea and report back.

More on this:
20 Minutes article (in French) – Take a 5 minute French test now