Voters in Switzerland shocked the political system by rejecting a reform plan that will have adjusted the nation’s company tax system to worldwide requirements.
The tax reforms, which had been extensively supported by the enterprise neighborhood, would take away a set of particular low-tax privileges that had inspired many multinational firms to arrange store in Switzerland.
Consultants say the way forward for Switzerland’s tax system is now unclear. The result of the vote may create complications for firms which have pledged to implement it and deter firms that had been contemplating shifting to the nation.
“They do not know what (tax) measures might be obtainable … That is not a really stable foundation for making funding choices,” Peter Uebelhart, head of tax at KPMG in Switzerland, mentioned in a video assertion.
Switzerland has come underneath intense strain from G20 and OECD international locations in recent times to scrub up its tax system. The nation dangers being “blacklisted” by different nations if it doesn’t change its tax system in 2019.
Many citizens rejected the tax reform bundle over fears it may cut back the quantity of income collected by the federal government, in accordance with Stefan Kuhn, head of company tax at KPMG in Switzerland. This might result in tax will increase on the center class.
The present tax system offers preferential therapy to some firms with giant operations overseas. Worldwide tax authorities say the principles quantity to unfair company subsidies.
Martin Naville, head of the Swiss-American Chamber of Commerce, mentioned voters might not have understood the complexity of the reforms. The measures had been rejected by 59% of voters.
“I believe it is a very unhealthy day for Switzerland,” Naville mentioned. “Clearly, uncertainty and credibility within the Swiss (system) has taken a giant hit.”
Swiss authorities say they are going to transfer shortly to create an amended tax reform proposal. Naville mentioned he expects new guidelines to be devised within the coming months.
“All stakeholders now must take accountability for creating a suitable aggressive tax system and to regain credibility concerning the well-known political stability that has given Switzerland such an advantageous place,” he mentioned in an announcement.
Naville hinted that potential tax reforms within the US USA and the UK may tempt Swiss-based firms to relocate, placing extra strain on Switzerland’s tax base.
CNNMoney (London) First printed February 13, 2017: 10:10 am ET