AIC HOSTS SPIRITED DEBATE OF GENEVA CORPORATE TAX REFORM
The rejection of the Corporate Tax Reform III initiative in February 2017 created a void in Switzerland and Geneva's corporate tax reform program, and left the country and the canton non-compliant with international requirements set by the Organization of Economic Cooperation and Development (OECD). The initiative aimed mainly to replace the special tax accords with Swiss-based multinationals and the higher local business corporate tax rate, with a single competitive cantonal tax rate.
On September 6, the Federal Council issued draft legislation for the so-called PF 17 or STR 17.
Will PF 17 be accepted by the public? Would PF 17 maintain or even improve our economic competitiveness? What are the best strategies set by the Swiss Federation to assure that PF 17 will be approved? Will the diverging interests and competition between the various cantons cause amendments that ultimately prevent PF 17’s approval?
These were some of the questions raised in this AIC forum at the Swiss Metropole Hotel on December 4, 2017. The event consisted of a high-profile panel including Dr. Serge Dal Busco, Conseiller d’Etat of Geneva in charge of Finance, Professor Xavier Oberson, a renown international tax expert, and Mr. Massimo di Cesare, Group Head of Tax at Richemont International SA, moderated by AIC Executive Committee Speakers Chair Giorgio Ferrero.
After a welcoming cocktail and a light lunch, each panel member gave his views on the topic from their own unique perspective.
Dr. Dal Busco offered reassurances that the canton will move as quickly as possible to maintain the 13.49% level of taxation previously proposed in August 2016. He stated that this level was needed to maintain competitiveness and even attract future businesses. He added that PF 17 would offer a “more balanced proposal” by removing some of the more contentious issues of the previous plan such as removing the disputed notional interest deduction (NID) measure among other ameliorating features.
Professor Oberson addressed the issue of Switzerland’s non-compliance with the OECD’s international tax guidelines, which will now be delayed beyond the initial OECD deadline of January 2019. Professor Oberson then went on to say that he believed that the OECD General Secretary would extend some leeway through 2020. He underlined the key elements of the Federal FP 17 proposal. He then stressed that controversial features such as NIDs (mainly popular in Zurich) and patent boxes (Basel) should be options that cantons can use if demanded, not forced universally on all cantons in a Federal proposal.
Richemont International’s Massimo di Cesare offered views from his position as head of tax for a multinational corporation. His “business first, tax after” philosophy stressed that the company first addresses such issues as operating costs, challenges from international competitors, the local availability of talent and the issue of Swiss taxes in an international environment.
A spirited Q&A session followed with an active dialogue between the audience and panelists. As the date for the next tax reform vote approaches, this debate is bound to heat up even further.