Swiss Government Welcomes BEPS Recommendations
The Swiss Government has tasked the Finance Ministry with responding to the OECD’s recommendations on base erosion and profit shifting.
Welcoming the OECD’s proposals, the Council said: “In general, the project outcomes will allow for [the] better coordination of international tax law rules and make it possible to close the gaps that multinationals could previously use for aggressive tax planning purposes. Moreover, the participation of the largest financial centers will lead to the creation of a level playing field for Switzerland and its competitors.”
After two and a half years of preparation and consultation, the OECD recently released recommendations for “a comprehensive, coherent, and co-ordinated reform of international tax rules,” to close loopholes said to cost nations up to USD240bn in corporate tax revenues each year.
The BEPS package includes new minimum standards on: country-by-country reporting; treaty shopping; curbing harmful tax practices; and effective mutual agreement procedures. It introduces updated guidance on the application of transfer pricing rules. The OECD is also encouraging governments to adopt stronger rules on Controlled Foreign Corporations, interest deductibility, and hybrid mismatch arrangements. It is continuing to lead talks between nearly 90 countries on the development of a multilateral instrument capable of incorporating the tax treaty-related BEPS measures into the existing network of bilateral treaties.
The Swiss Federal Council said that the third series of corporate tax reforms currently underway in the country takes account of certain BEPS outcomes. Provision has been made for a compliant patent box and the abolition of certain tax regimes that have been criticized internationally. Switzerland will create the necessary legal basis for the exchange of information on tax rulings, and is preparing the legal foundations for the implementation of country-by-country reporting requirements.
The Council also said that it will take account of the OECD’s recommendations on anti-abuse clauses in double taxation agreements and decide whether to make the necessary adjustments on a multilateral or bilateral basis. With regard to the recommendations that are not in the form of minimum standards, the Council has instructed the FDF, in collaboration with the cantons and business associations, to analyse how Swiss corporate tax law can be amended.