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Switzerland’s Federal Council on 6th September initiated a consultation on a new proposal to reform the Swiss corporate tax system”, known as Tax Proposal 17 or TP 17.

A steering committee charged with preparing a new plan for tax reform presented its objectives and recommendations, recently.

The expected date of implementation is 2020.

Objectives & Recommendations – In Brief

The Federal Council opined that the Switzerland’s current system for corporate taxation is “no longer meets international standards and requirements, which is having an increasingly negative impact on Switzerland.”

The proposal provides –

  • Abolition of special tax arrangements for cantonal status companies.
  • Introduction of a generous patent box regime to attract foreign investment.
  • An option to introduce additional deductions for research and development (R&D).
  • The dividend taxation for “natural person” will be increased to 70% from 60%.
  • An increase in the share of the direct federal tax income, to 20.5% from 17%.
  • An option to reduce capital taxes on equity that relates to participations or to patents or similar rights.
  • Disclosure of hidden reserves by foreign companies including goodwill, without Swiss tax consequences.
  • Swiss Permanent Establishments (PEs) of foreign companies will be entitled tax credit. In other words, avoidance of double taxation & other related measures.
  • Increase in child & education allowance.
  • Withdrawal of “Notional Interest Deduction Concept.”

The consultation will close on December 6.

Source: International Media Reports.

The Author is a budding tax Law Professional & can be reached at

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April 2024