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1 Sebastian Duenas, et al., Switzerland Referendum Approves Tax Reform 1 (2019)

handle is hein.taxfoundation/swzrftr0001 and id is 1 raw text is: Switzerland Referendum Approves Tax Reform FISCAL FACT No. 658 Jun. 2019 The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, local, and global levels. We are a 501(c)(3) nonprofit organization. @2019 Tax Foundation Distributed under Creative Commons CC-BY NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org Sebastian Duefias Researcher Daniel Bunn Elke Asen Director of Global Projects Research Assistant Key Findings * On May 19, after more than four years since the first effort to reform the Swiss tax system, voters accepted proposed changes to their tax system. The reform is expected to be in effect by 2020. * Swiss cantons will no longer be able to lower multinationals' corporate tax rates; instead, all companies will be subject to the same tax rate. * Patent boxes at the cantonal level will allow for preferential tax treatment of profits derived from patents, and cantons will be able to allow for R&D deductions. * Taxes on dividends will be increased and cantons will receive a higher share of federal tax collections. * Estimates show that the reform will lead to an annual decline in corporate tax revenue of CHF 2.2 billion (USD $2.2 billion) in the short term. * Tax reform was initially motivated by the agreement made between the Swiss government and the European Union (EU) to conform the Swiss tax system to standards suggested by the Organisation for Economic Co-operation and Development (OECD). * With the reform, there is an ongoing concern that the tax increase will lead to corporations looking to relocate to jurisdictions with more favorable tax conditions. * The main objectives of the reform are to keep Switzerland an attractive business location, to gain international acceptance, to avoid sanctions from the EU, and to improve the effective use of tax revenues at all governmental levels.