In a climate where
there is increasing public and political antipathy towards big companies
avoiding tax by basing themselves in low tax jurisdictions, Geneva has been
coming under pressure to end the practice of giving fiscal benefits to international
holding companies. At present, companies
with 80% or more of their activities outside of Switzerland pay much lower tax
rates than domestically focused companies. Geneva has been a particular target
of EU criticism because of its success in attracting international business on
this basis - there has been a substantial growth in the number of commodity
trading companies and other multinational headquarters in the canton during recent
years. 945 holding companies currently benefit from its reduced tax regime.
In a surprise move
yesterday, it was announced that the canton intends to abolish the special tax deals
for multinationals, but instead will lower all corporate
taxes to a flat rate of 13% - approximately one half of the existing rate for
non-holding companies and almost on a par with Ireland’s 12.5% rate on trading
profits.
It is not yet clear
how the canton will fill the fiscal hole that the considerable rate reduction
for local businesses will create.
No comments:
Post a Comment