On 5 October 2015, the OECD published the final reports on the Base Erosion and Profit Shifting (BEPS) Action Plan, concluding the work initiated in 2013. The Action Plan seeks to fight the excessive reduction of taxable profits and artificial profit transfers to jurisdictions with low or no taxation.
Over 60 countries, among which all OECD and G20 member states, as well as others such as Senegal, Singapore or Columbia, were involved in the BEPS project.
The automatic exchange of country by country tax reports (recommendation 13) is one of the main outcomes of the project. It is a minimum standard that all OECD and G20 countries have politically agreed to enforce. The “Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports” was drafted to this effect.
The country-by-country declarations will provide a breakdown of tax-relevant information by country and tax jurisdiction. Data reported will include turnover figures, taxes paid and other key figures for multinational groups.
Following ratification of the multilateral agreement, countries are now in the process of adopting legislation. The European Union for example published a proposal for a Directive on the disclosure of corporate tax information on 12th April 2016.
OECD BEPS portal
EU Country-By-Country Reporting and Tax Transparency portal
Switzerland is also looking to incorporate the OECD’s BEPS recommendations in its legal framework, having signed the multilateral agreement on 27 January 2016.
The Swiss Federal Department of Finance launched a public consultation in April 2016 on the multilateral agreement on the exchange of country-by-country reports and the accompanying federal law implementing the new framework.
Swiss Federal Portal on Exchange of Country-by-Country Tax Information
Swiss Law on the Automatic Exchange of Information in Tax Matters (in FR)
Besides implementing the OECD’s recommendations on country-by-country reporting for multinationals, Switzerland is also considering a comprehensive corporate tax reform, referred to as “Corporate Tax Reform III”, which will have a fundamental impact on the country’s tax system and existing tax regimes. The draft federal bill was published in June 2015.
The reform aims to secure and strengthen Switzerland`s competitiveness and attractiveness as an international location for corporations. It will result in the phasing out of the so-called holding, mixed company, domiciliary company regimes as well as the principal company regime and finance branch regime.
The new rules -expected to enter into force in 2019- will end the special tax status applicable by the cantons to companies whose business is mainly performed abroad. As a result, commodity trading companies based in e.g. Geneva will see on average their corporate income tax increase, from 11.6% to the future single tax rate of around 13%
Corporate Tax Reform III package
Following the rejection of the CTR III package by the Swiss electorate on 12 February 2017, a new proposal has been developed, the Fiscal Project 17.
Fiscal Project 17 Overview and Key Measures Table
The introduction of a Swiss Tonnage Tax (brought in the CTR III project by STSA on behalf of its shipping members) was agreed by the National Council in March 2016 (138 votes to 52), as well as the Council of States who asked the Federal Council to deal with it in a parallel procedure to RIE III.
STSA has worked hard in the last three years to align Switzerland with the majority of European countries that have adopted this fiscal approach for shipping activities. Today more than 80% of the global fleet (more than 98% in the EU) falls under a tonnage tax regime. It is a key measure to ensure the competitiveness of the Swiss shipping activity.
The shipping industry in Switzerland suffers from a competitive disadvantage compared to neighbouring countries due to the absence of a tonnage tax regime.
The simulation conducted by STSA has shown that the introduction of a tonnage tax regime in Switzerland would increase revenue significantly for Cantons where maritime companies establish seats. It will thus facilitate the reduction of the tax rate (in particular for the Canton of Geneva) and strengthen the whole commodity trading hub.