Thomas Schlittler (text), Igor Kravarik (caricature)
Olaf Scholz (62) called it a “tax revolution”. The reason for the big words of the German finance minister: The seven leading industrial countries G-7 have agreed on a minimum tax of 15 percent for large corporations. “This is bad news for tax havens all over the world,” said the Social Democrat triumphantly.
USA, Canada, Great Britain, Germany, France, Italy and Japan sell the planned reform as a start into a better world. Many tax experts and business representatives in Switzerland assess the G-7 decision completely differently. They rate the plans as an unjustified demonstration of power by the large industrial nations – and as a further attempt to weaken small, economically successful countries like Switzerland.
They don’t believe in the idea of a better world. “The reform plans of the G-7 are not expedient,” says Martin Hess (49), head of taxes at the Swissholdings association. He represents the interests of large corporations such as ABB, Glencore, Nestlé, Novartis and Roche.
Hess is convinced that the race to undercut for the lowest tax rates – he calls it “Race to the Bottom” – will lead to a “Race to 15 percent”. And a boom in subsidies and other state aid. “I don’t think that the international corporations will sell more on balance,” said Hess. The location competition for these important taxpayers cannot be prevented.
Taxes could be given away to other countries
Frank Marty (49), tax officer at the business association Economiesuisse, sees it similarly: “The global reform plans will not lead to more justice. The tax competition simply turns into a subsidy competition – and this is much less transparent. “
Despite all the criticism, those responsible in Switzerland seem to have already come to terms with the new tax reality. In theory, cantons like Zug could maintain their low corporate income tax rates. However, this would no longer help the large corporations located here in the future.
The reason: If a company in Switzerland pays less than 15 percent profit tax, these amounts are collected in another country.
“If, for example, a Swiss company pays only twelve percent profit tax in Zug, the remaining three percent is collected from a sister company in the USA and the license fees are paid to the Swiss company,” explains Peter Uebelhart (51), head of tax policy at the consulting firm KPMG.
In other words: Switzerland would be badly advised if it left the tax burden for large corporations at less than 15 percent. It would give away tax money to other countries.
How does Switzerland stay more attractive than other business locations?
A working group with representatives from the Confederation, the cantons and academia is therefore discussing how Switzerland can adapt to the new tax regime. In essence, it is about two questions: How do we best implement the new international requirements? And: How does Switzerland stay more attractive than other business locations? In order to guarantee this, the representatives of the large corporations want to go completely new ways: They call for state subsidies.
“In the past, Switzerland avoided direct support and funding measures. But now we are being urged by the international community to consider such instruments, ”says Martin Hess from Swissholdings.
The possibilities for this are almost unlimited, as a look abroad shows. Hess brings the following measures into play: “Switzerland could, for example, grant companies that want to set up shop with us preferential loans for investments. Or when hiring researchers, the cantons could pay part of the social security contributions, with the profits from research being taxed here too. “
Cancellation of the issue tax would be possible
Frank Marty from Economiesuisse has further suggestions: “Funding for research and development could flow directly to companies that invest here. Or companies could receive subsidies if they undertake renovations that help minimize energy consumption. “
The advocates of the free market economy do not quite agree with these proposals. Hess emphasizes that such measures are unattractive “from a liberal point of view”. An industrial policy à la France must be avoided at all costs. However, he is convinced that Switzerland cannot avoid breaking new ground. Marty says it very clearly: “Even if we don’t like it, we must now consider such measures.”
In addition to subsidies, fiscal steps are also being discussed – i.e. the elimination or reduction of corporate taxes that are not included in the minimum tax of 15 percent. It would be possible, for example, to cancel the issue tax or to adjust the withholding tax or sales tax.
With all these innovations, however, the question should always be in the room: Are they tolerated by the international community?
The Swiss Confederation should support the economy as indirectly as possible
René Matteotti (52) holds a chair for tax law at the University of Zurich and is a member of the federal and cantonal working group. He points out that Switzerland cannot simply do whatever it wants with subsidies. The economic constitution law, the WTO subsidy law and the prohibition of subsidies in the free trade agreement with the EU should be taken into account.
All of these contracts set barriers to competition-distorting measures. For Matteotti it is therefore clear: “Switzerland cannot simply collect an additional tax from a large corporation and then immediately return it as funding. That would hardly be accepted internationally. “
Matteotti said that if the Swiss Confederation wanted to provide additional support to the economy, it would have to be as indirect as possible. For example, by investing in research and development, sustainability and infrastructure.
But there is also a problem here: the large corporations have little joy in such plans. For them and their shareholders, direct support – like the low tax rates up to now – would be a lot more lucrative.