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Swiss Cities Demand end to Opaque Cantonal Tax Competition

The proposed 15% minimum corporate tax rate is an opportunity for Switzerland to unite its tax code for the better, says an organization representing Swiss cities.

Cities like Zurich rely on company tax revenues to provide services and infrastructure. © Keystone / Gaetan Bally

City finance directors have criticized cantons for trying to plug expected tax gaps unilaterally, rather than find a common approach nationwide.

The United States is currently leading efforts by the G7 top industrialized countries to change the way that multinationals are taxed globally.

One of the proposals is to impose a minimum rate of corporate tax – mooted at 15%. Opponents say this would disadvantage smaller countries, like Switzerland, which set lower taxes to attract multinational regional HQs.

But the Swiss Conference of City Finance Directors told Swiss public broadcaster SRF on MondayExternal link that it welcomes the proposed tax reform.

“The cities have always spoken out in favor of appropriate taxation for large corporations and companies,” said vice-president Daniel Leupi. “They should contribute appropriately to participate in services and the infrastructure that cities offer.”

Leupi added that the tax reform writing has been on the wall since Switzerland was forced by the European Union to end anti-competitive tax practices in 2019.

Should the minimum corporate tax rate become a reality, Luepi warns against an opaque and piecemeal response, such as research tax credits in some cantons and different measures in others.

The Association of Swiss Cities has already made this appeal, arguing in a position paper on June 9External link that “new reforms harbor the risk of creating new inter-cantonal inequalities”.

Swiss cities want to replace cantonal tax competition with a nationwide harmonization of the tax code.

“It is particularly important to highlight the real strengths of our country, such as security, a well-qualified workforce, top infrastructures and political stability,” they state.

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