After the rejection of the IIIrd Corporate Tax Reform package through a popular referendum held in February 2017, the Federal Council finally released a revised legislative bill for a tax reform (the "Tax Proposal 17") on 21 March 2018, after a public consultation process was held.
Overall, the Tax Proposal 17 includes measures that are fairly similar to the previous version of the reform package that was rejected, with some modifications designed to achieve the buy-in from the majority of the Swiss populace. As the previous package, the Tax Proposal 17 would repeal the current privileged corporate tax regimes (holding, mixed and domiciliary or auxiliary companies, the finance branch regime and the principal company regime) and introduce some new measures designed to maintain Switzerland's competitiveness in the international tax arena (in particular, an OECD-conform patent box regime and a super-deduction for R&D expenses). However, the highly controversial notional interest deduction is no longer included in the current proposal.
The key measures of the proposal are set out below:
Although not formally a measure of the proposal, in particular the increase of the cantons' share in federal tax revenues is meant to allow for general corporate tax rate cuts at the cantonal level, which the cantons are expected to make use of at varying degrees.
The debate in the two chambers of the Federal Parliament on the Tax Proposal 17 bill is planned to be completed in September 2018. Provided that no referendum will be called, the first measures of the reform are scheduled to enter into force by 1 January 2019, while the main part of the reform would be implemented by the cantons and become effective as of 1 January 2020.
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