Switzerland Improves
Corporate Tax Position
by Ulrika Lomas,
Tax-News.com,
Brussels
15 September 2008
Switzerland has
again improved its performance in a comparison of
corporate tax rates across the world by tax and business
advisory firm KPMG, which also found that South-Eastern European
states are once again at the top of the table.
For the first time,
the most attractive European business location as regards
taxation is Montenegro, where corporations pay only 9% tax on
their profits, followed by other countries in South-Eastern
Europe where the tax stands at 10% –
Bulgaria, Cyprus, Serbia, Albania, and
Bosnia and
Herzegovina.
This is what emerges
from the latest survey on taxes on profit and sales around the
world, following analyses conducted by KPMG in over 100
countries.
The international
comparison of corporate tax rates in 2008 again showed
Switzerland significantly improving its position. While the
median rate for tax on profit (the average of all 26 cantons)
was 20.6% in 2007, it is now 19.2%, a reduction of 1.4%.
In 2007, the rates
in the cantons varied from 13.1 to 29.1%, but corporate tax
rates this year are showing a significant downward trend,
sinking to between 12.7 and 24.2%, with the two cantons with the
lowest rate – Obwalden and Appenzell-Ausserrhoden, both at 12.7%
– almost catching up with
Ireland,
which has the lowest rate in
Western Europe (12.5%).
Far and away the
most substantial cuts in corporate tax have been implemented
this year by Grisons (-10.2%),
Schaffhausen (-6.8%), Appenzell-Ausserrhoden (-5.3%) and
Basel-Land (-5%). Grisons has thus leaped from its former
position at the bottom of the table to 12th in the
inter-cantonal ranking.
Last year, the
median
corporate tax rate (the average of all countries) was
26.9%, but it now stands at 25.9% – down 1%.
As KPMG reported
earlier this week, comparison of economic areas around the world
(as an average of the countries in each area) shows that
companies looking for the lowest corporate tax rates will still
find them in the member states of the
European Union, where rates have gone down by 1% to 23..2
% from 2007 to 2008. By comparison, companies in the
Asia-Pacific region currently reckon with a 28.4% average across
the countries there. Even though the rates have been cut by 0.8%
in the last year, they are still the highest among the global
economic areas.
Commenting on the
findings of the latest corporate tax rate survey, Jorg Walker,
Head of Tax at KPMG Switzerland observed:
“In a world in which
companies and their profits are constantly becoming more mobile,
more and more states are changing over from taxing company
profits, preferring instead to put the taxation of sales – and
hence of goods and services – at the heart of their budget
planning. The result of this is that tax falls, not on
companies’ profits, but on consumption, and it is the consumers
in the various countries who end up footing the bill."
Walker added:
“Switzerland is still resisting this trend, and is one of the
few countries to do so. Our country is succeeding in attracting
capital imports by means of constant cuts in corporate tax rates
and nothing else – without relying on cross-subsidization by
raising VAT rates in the way some of our neighbours do.”
