GENEVA: Switzerland voters, under international pressure, are being asked in a national referendum next Sunday to approve reforms that would sweep away selective tax deals and introduce unified low rates for all companies.
The vote is on a knife-edge. Supporters of reform say Switzerland cannot afford to be so generous. But rejection could prompt other countries to retaliate for the continued tax breaks, creating economic uncertainty and instability.
“It is very important for Geneva,” says Serge Dal Busco, the canton’s finance minister, who backs the reforms. “Some 62,000 jobs in the canton rely directly or indirectly on multinationals. If they don’t have a favourable tax environment, we could lose at least some of those jobs.”
Switzerland, one of the most affluent countries, has to rethink its economic model during the past decade. US-led legal action against banks that helped overseas clients to evade taxes has led to greater transparency in the financial system.
Threats of retaliatory action by trading partners led Bern to agree to corporate tax norms set by the EU, with which it has vital business links, and the Paris-based OECD.
“The Swiss government had to recognize that instruments which worked well for many years could no longer be used,” says Peter Uebelhart, head of tax at KPMG Switzerland.
