Relatively low tax rates, respect for financial privacy, and attractive, low business tax laws have earned Switzerland a reputation as a “tax haven.” The attraction of Switzerland as a location for corporations is that it offers low taxes in a country that for centuries has proven itself to be stable politically, conservatively managed, financially sound and highly accomplished in its financial operations.
But Switzerland is not necessarily a tax haven for Swiss residents or domestic companies, although tax rates are much lower than in the surrounding left-leaning socialist EU nations, such as France and Germany. Indeed, those two countries, and the illogical, high tax bureaucrats at the EU headquarters in Brussels, constantly complain that low Swiss corporate taxes are unfair competition. Of course, they would never think of lowering their own taxes in order to compete.
Even with taxes foreign investors can avoid many Swiss taxes by choosing certain types of investments that escape those taxes. The tax system is strictly “territorial,” meaning that the government does not tax income that is earned outside Switzerland.
Last week a new and authoritative report confirmed Switzerland to be "a tax paradise" for corporations and holding companies registered there. The country was highly rated for its favorable, low tax rates and overall ease of paying taxes. The results come as tension between Switzerland and the EU over the Swiss corporate tax system continues.
The report, Paying Taxes 2008 – The Global Picture, is a study by the World Bank and the professional financial services firm, PricewaterhouseCoopers (PwC), that rates the tax systems in 178 countries according to how much tax businesses are forced to pay. Switzerland was 24th worldwide in terms of total tax rate – all taxes that businesses pay – and second in Europe, behind only Ireland. (The United State with a one of the highest corporate tax rates of 35% ranked 102nd in level of business taxes and 76th in ease of payments). Report http://www.doingbusiness.org/documents/Paying_Taxes_2008.pdf
Jealous Neighbors
"With a total tax rate of 29.1%, Switzerland is only 0.2% behind top-ranked Ireland with 28.9%," said PwC. Switzerland did considerably better in the world listings than its jealous high tax neighbors: Germany (50.8%, ranked 124), France (66.3%, ranked 157) and Italy (76.2%, ranked 168).
The study reviewed ease of paying taxes, rating how easy or complicated it is for companies to pay taxes. Switzerland came in 15th worldwide and fourth in Europe in this category. The research also showed the amount of time taken by companies to comply with their tax obligations, such as filling in their tax returns. "Switzerland is very attractive... In the global ranking it is placed sixth [in this category] and in the European comparison, second after Luxembourg," said Armin Marti of PwC Switzerland.
The tax praise for Switzerland comes at a time of a continuing corporate tax argument between the EU and Switzerland. Brussels wants the Swiss authorities to end the practice by some cantons that exempts company profits generated in EU countries from tax. It claims doing so violates a 1972 free trade treaty.
Switzerland has repeatedly refused to negotiate with the EU over the issue. The center-right Swiss government rightfully says that corporate taxes are a cantonal issue and are not covered by the trade agreement.
Research earlier this year confirms Switzerland is attracting companies for tax reasons. It found that a record number of firms had set up shop in the country in the first six months of 2007. Canton Obwalden, which drastically slashed corporate tax rates at the beginning of 2006, recorded the fastest growth.
* Find out more about how Switzerland can benefit your banking, investments and asset protection. Click here http://web-purchases.com/190STHOW/W190H723/
Comments