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Switzerland: Corporate tax rate reduction, other measures proposed for Geneva

Switzerland: Corporate tax rate, proposed for Geneva

The Geneva State Council presented a final cantonal project for implementation of federal tax reform and other tax provisions, including a measure to reduce the canton’s corporate income tax rate to 13.79%.

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Following the Swiss Parliament’s passage in September 2018 of a law that is known in English as the “Federal Act on Tax Reform and AVS Financing” (TRAF), amendments were made to the initial cantonal project of Geneva including the following:

  • Corporate income tax—an effective tax rate of 13.79%
  • Capital tax—a credit of income tax towards capital tax (tax credit) limited at 50% for five years, then unlimited afterwards
  • Dividend taxation—taxable part of 70% for investments held in private wealth, 60% for investments held in business wealth
  • Patent box—a reduction of qualifying income, limited to 10%
  • Research and development—a “super-deduction” limited to 150% of the commercially justified expenses
  • Notional interest deduction—not applicable at cantonal level for Geneva (unchanged)
  • Disclosures of hidden reserves (transitional step-up)—applicable for five years from the end of the tax status, the taxation of hidden reserves reduced to 13%
  • Overall limitation of tax measures—cantonal cap on cumulated reduction effects to 9%, leading to a minimal income tax rate of 13.29%
  • Recurring supporting measures—withholding of 0.07% on the wage bill (payroll) in favor of the early childhood and family care facilities

The next step is for the cantonal parliament to organize a public vote in May 2019. Thus, voters in Geneva would vote jointly on the federal and cantonal projects on the same day. If approved, both the federal and cantonal projects would be effective 1 January 2020. 

 

Read a 2018 report prepared by the KPMG member firm in Switzerland

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