No-Vote on CTR III

Referendum, Rejection, Re-Evaluation

On February 12, 2017, the Swiss people have rejected the law on corporate tax reform III with 59.1 percent no-votes.

The reduced taxation of holding, domiciliary and mixed companies should have been abolished with the third series of corporate tax reforms. This reduced taxation is no longer in line with international standards. To prevent a loss of competitiveness for Switzerland, internationally accepted tax relief measures should have been introduced. In doing so, the focus would have been on the promotion of innovations. The Confederation should also have shared the burden of the profit tax reductions envisaged by the cantons. It was thus planned to increase the cantons' share of direct federal tax from the current level of 17% to 21.2%. A referendum was held on the reform. Opponents expected high tax receipt shortfalls. They feared that the population would be required to pay for these shortfalls.

An immediate re-evaluation is required. Thereby, the following topics need to be considered:

  • The parliament needs to draft a new law on corporate tax reform III and to search for further compromises.
  • The cantons could decide to lower their tax rates and take other measures on their own.
  • Exisiting tax privileges remain in force. The corporateion should nevertheless analyse whether it is beneficial to cancel such rulings and to take advantage of a tax-free step up.
  • In addition, existing rulings will be internationally exchanged from 1.1.2018. This fact could also be a reason to cancel them. 

It is recommended to analyse the factual circumstances with regard to developments on CTR III, business model, ownership structure and location aspects in more details. Based on the results, specific recommendations should be fomulated and next steps should be defined. We are looking forward to have a fruitful discussion with you.

* Thomas Linder

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