GENEVA: When the European Union pressured Switzerland to scrap tax breaks for foreign companies, Geneva had most to lose. Now, the canton that is home to almost 1,000 multinationals is set to use tax to burnish its appeal.
Geneva will on August 30th propose cutting its corporate tax rate to 13.49 per cent from 24.2 per cent, according to sources. For an interim period of five years, the rate will be a slightly higher 13.79 per cent, the sources said. While that’s 2.2 percentage points higher than the average preferential rate currently offered to many foreign firms, the new regime will improve the Swiss city’s competitive position, according to Credit Suisse Group.
“I could see Geneva going up very high in the ranks,” said Thierry Boitelle, a lawyer at Bonnard Lawson in the city. “International companies will be glad to have some certainty when the new rate is finally implemented.”
Like the rest of Switzerland, Geneva has been buffeted by the strong Swiss franc and concern over immigration quotas, while the demise of banking secrecy has hurt the city’s financial industry. The stakes are high for the politicians contemplating a tax rate to underpin the French-speaking canton’s allure: multinationals from Procter and Gamble to commodity trader Mercuria Energy Group account for 76,000 jobs and 40 per cent of the economy.
“It’s the mother of all battles for us,” says Vincent Subilia, deputy director of international affairs and arbitration at the Geneva Chamber of Commerce, Industry and Services. “We can’t afford to lose it because the attractiveness of Geneva and the shape that our economy will take for generations to come are at risk here.”
