Switzerland: The government of the canton of Vaud has just announced that the corporate tax reform (“CTR III“) will enter into force on the 1st of January 2019, without waiting for the federal tax project to be adopted (“Tax Proposal 17“).
So, from 2019, the total effective rate of tax on profits (Confederation, canton and municipality) for legal entities domiciled in Vaud will be 13.79% (compared to the current rate of 22.3%).
In addition, a single rate of tax on capital will be adopted, at 0.6‰ (0.06%) (Tax on profits will continue to be credited against tax on capital).
These changes will place the canton of Vaud among the most fiscally attractive places in the world for companies (ahead of Hong Kong, Singapore, London etc.) without being considered a tax haven.
In addition to changes to tax rates, other measure are planned, firstly to compensate for the reduction in tax revenues (CHF128 million annually), and secondly to sustain jobs and maintain families’ living standards.
So, Vaud canton intends to increase family allowances, reduce health charges and boost government funding for childcare. In addition, the canton plans measures to reduce rental value of the real estate properties.
Almost two-thirds of the cost of the corporate tax reform will be met by the private sector, in the form of higher employers’ social contributions.