Slightly reduce corporate tax burden
On average, corporate income tax rates in the Swiss cantons are currently slightly lower than the previous year’s level.
Zug heads the order of low-tax cantons for corporations.
Photo: Urs Flueeler/Keystone
The tax burden for businesses in this country decreased slightly last year. With the introduction of global minimum taxes, there are now signs of a shift in tax competition toward subsidy competition, according to a study by audit and advisory firm KPMG.
Average profit tax rates in Swiss cantons are currently 14.6% after 14.68% a year earlier, KPMG reported in the new study “Clarity on Swiss Taxes” published Thursday. From 2022 to 2023, there were only small, isolated cuts in the tax rate.
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competition by subsidies
With the introduction of the OECD minimum tax, the local tax rate has become less important, at least for multinational corporations. In mid-June, voters will decide to introduce a minimum tax rate of 15% for large companies with annual sales of more than 750 million euros.
According to KPMG experts, as tax competition decreases, states are increasingly competing in favor of businesses through subsidies. In general, the “revival of the idea of industrial policy” can be observed, Andrei Gödel, co-author of the study, told the media. He referred to the billion-euro packages of the “Green Deal” in the European Union with investments of 500 billion euros and the “Inflation Reduction Act” in the United States worth 350 billion dollars.
promotional measures
For Switzerland, this means that the race for subsidies is already on. “The introduction of similar financing measures should now be discussed at the latest,” said Gödel. According to the federal proposal, 75% of the income from supplementary taxes should remain with the cantons: according to KPMG experts, the extra tax revenue would give cantons leeway to take additional action on positioning.
Even if such important countries as the USA, as well as Brazil, India or China are initially excluded from the minimum tax, it is desirable that Switzerland participate in it. Because if the local tax rates remain below the OECD minimum rate, then the difference can be cleared by another country, for example in the European Union, in its subsidiary according to the mechanism – for large firms affected, the final effect will be the same .
Switzerland remains tax-friendly
In an international comparison, according to KPMG Current Group, Switzerland is a tax-efficient country for corporations. Ireland is an important competitor in Europe, with a dividend tax rate of 12.5%. Lower corporate tax rates can be found in Hungary (9%) and Bulgaria (10%), while Guernsey’s Channel Island has no corporate tax at all.
The lowest corporate tax rates in all of Switzerland can still be found in the central Swiss cantons as well as in Glarus and Appenzell-Inruden: the low-tax cantons Zug (11.8%), Nidwalden (11.97%) and Lucerne (12.15%) lead the ranking. The cantons of Zurich (19.65%) and Bern (21.04%) came in at the bottom.
Argao lowers
There were larger cuts in corporate income tax rates last year in the cantons of Aargau (-1.16 percentage points to 16.26%) and Basel-Landschaft (-2.07 percentage points to 15.09%). In turn, the canton of Neuchâtel raised the profit tax rate from 2022 to 2023 (+1.32 percentage points to 14.89%).
KPMG also collected the maximum tax rates for individuals in the various cantons. On average in Switzerland, the rate for high-income taxpayers is almost unchanged at 33.45%. The cantons of Zug (highest tax rate 22.06%) and Appenzell-Inruden (23.82%) remain the most attractive to wealthy taxpayers, while Geneva (44.74%) and Basel-Landschaft (42.17%) remain the least attractive.
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