EU Commission ‘very disappointed’ by Swiss tax reform vote

EU tax commissioner Pierre Moscovici will consult with EU governments on how to proceed Keystone

The European Commission is disappointed that Swiss voters rejected plans to overhaul corporate taxes and will consult with European Union governments on how to proceed, the EU tax commissioner Pierre Moscovici said on Monday.

Voters on Sunday blocked the tax system revamp, sending the Swiss government back to the drawing board as it tries to abolish ultra-low tax rates for multinationals without triggering a mass exodus by those companies.

The vote put non-EU member Switzerland on a collision course with the EU and the OECD (Organisation of Economic Co-operation and Development), the club of rich countries. The Swiss had promised to meet international standards and end by 2019 special low tax rates that benefit around 24,000 foreign companies.

“The Commission is very disappointed by the results of a referendum in Switzerland,” Moscovici, European Commissioner for Economic and Financial Affairs, told a news conference.

“The rejection of the reform and referendum means we need to redouble our efforts when it comes to taxation. The Commission plans to consult the member states so we can decide together how to proceed,” he said.

Low-tax pariah

The OECD said in reaction to the referendum result that Switzerland could still meet its international obligations but must lose no time in finding a solution.

“Switzerland’s partners will expect it to implement its international commitments within a reasonable time period and this need not happen within the context of a wider reform, which could take longer than the two years originally foreseen for these changes,” said OECD tax director Pascal Saint-Amans.

He told Swiss public television, SRF, on Monday that Switzerland’s OECD partners would become impatient if the reform dragged on another four or five years like the previous implementation period.

“I believe that everyone understands that Swiss democracy, which is a model, needs time. But the time required for the democratic system must be used to ensure it meets its commitments to change these tax practices,” he added.

Most Swiss recognise that the country needs reform to avoid being blacklisted as a low-tax pariah. But new measures proposed to help companies offset the loss of their special tax status fuelled fears among voters that regular taxpayers would have to pay more.