Switzerland: Commodities tax haven threatened
27 August 2012
Swiss banking secrecy laws are not the only item in the European Union's sights. Since 2005, it has asked for changes in Swiss tax laws regarding commodity trading firms (oil, metals, grains) registered in the country. Switzerland became a world leader in the sector, in part thanks to "preferential tax laws that allow multinational trading firms to pay less tax than local firms," notes Swiss daily Le Temps in a lead article.
"Extensively used by raw materials traders, the system is viewed as discriminatory by the EU," explains Le Temps. Today, facing impatience from Brussels, Bern is now proposing to adopt a flat tax for all firms, rather than to be subjected to sanctions. "An option which is turning into a headache," says the leader writer, because
if they tax the traders at the current ordinary level, they will leave and thousands of jobs will be lost [...] as will millions [of Swiss Francs] in tax revenue. If they lower the ordinary level to one deemed acceptable to the commodity traders, they will dig huge holes in their budgets.
Harmonising corporate tax rates must be done at the canton level and must be decided by a ballot. With that in mind, the writer sends a warning:
If Switzerland should learn something from the banking secrecy debacle it is this: it is risky to build one's prosperity on a legislative advantage that can be wiped out in a couple of months by international pressure.