Summary SH position
The withholding tax reform is important for the large Swiss industrial and service companies. It will substantially strengthen the Swiss capital market, make Switzerland more attractive internationally as a business location and generate considerable additional revenue for the Federation and the cantons.
Due to new OECD requirements, the reform is urgent. At the same time, the new requirements represent an opportunity for Switzerland. Companies can best meet them by bundling their financing activities at their headquarters in Switzerland. To avoid costly double taxation, the adjustment of participation deduction must also be included in the bill.
Even if there is disagreement among the consultation participants on certain technical points (loophole or reporting procedure for foreign interest products), the reform must be submitted to federal parliament without delay. The two chambers should decide whether priority should be given to fiscal banking secrecy (loophole) or a tax protection system without loopholes (reporting procedure).
In the area of foreign interest products (investment funds, bonds etc.), the Federal Council’s proposal will only partially function. Two alternatives are available. Firstly, a loophole in tax protection (status quo). Secondly, the introduction of a reporting procedure. Our member companies can support both solutions, but favour a complete tax protection.
For our companies, it is crucial that the current withholding tax on Swiss bonds is abolished quickly and that bond interest can be paid to foreign investors and Swiss legal entities without a withholding tax deduction in the future. The substantial additional income for the Federation and the cantons resulting from the reform is based mainly on the growth of the Swiss economy and less on the improvement of tax protection.
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