IMF Welcomes Corporate Tax Reform In Switzerland

The International Monetary Fund has welcomed plans for corporate tax reform in Switzerland and called for its "timely completion."

Switzerland has faced international pressure in recent years to reduce the favorable tax treatment provided to multinational corporations in many cantons, the IMF noted in its 2015 Article IV Consultation report for the country. In this context, the authorities have developed a corporate tax reform, expected to be submitted to Parliament this summer and implemented by 2019, that intends to reform special tax regimes that give more favorable treatment to income from foreign operations than income from domestic operations.

As this will in some cases result in a net revenue loss, the federal Government has proposed to provide fiscal support to cantons to offset the impact of the reform. The current estimate of the needed transfer is approximately 0.25 percent of gross domestic product (GDP), the IMF said.

The IMF report welcomed efforts to reduce distortions in the corporate tax code and encouraged authorities to finalize the reform in a way that is consistent with ongoing international initiatives to counter base erosion and profit shifting.

The report also welcomed proposed reforms of the pension system, including a two percentage point increase in value-added tax (VAT) rates by 2029 to ensure more stable funding for the system. Such reforms will help ensure the sustainability of the social safety net and its continued availability for future generations, the report said.

The IMF also said that reforms to boost full-time female labor force participation, such as lowering marginal tax rates on second incomes, could boost potential growth over the medium term.