Zug new taxation system

The Federal Steering Committee just announced its proposals for a new tax regulation that is intended to implement a standard corporate tax rate of approximately 12 percent, without any significant financial losses for the cantons of Switzerland and especially for Zug, municipalities, companies and private individuals. The purpose of this reform is to make Switzerland’s tax system acceptable again on an international level so that the tax burden will not be shifted to private tax payers. Following the Swiss electorate’s rejection of the Corporate Tax Reform III (CTR III) from 12 February 2017, the need to clarify the economic and taxation framework conditions for internationally operating companies increased, thus the new actions taken by the Federal Steering Committee. Some of the most important changes refer to: 1.Standard corporate income tax rate of approximately 12% for all companies, from 14.6% as in present; 2.Introduction of a patent box with a cantonal tax relief of 90 percent; 3.Research and development to be promoted with a cantonal tax deduction of 150 percent. The maximum discharge shall equal 70 percent of net profit. 4.The taxation of qualifying dividends shall have to be increased from currently 50 percent to 70 percent. The Canton of Zug is not affected by the increase of the minimum amount for child and education allowances, as it already has higher amounts in effect. The new Zug’s taxation system is intended to be neutral so that various additional revenues offset each other almost entirely. The consultations for a cantonal implementation are expected to begin in April 2018, so that the amendments can come into effect by 2020. In fact, a first consultation is expected in the summer of 2018. The officials leading the canton of Zug plan to consult on the draft during the first semester of 2019 in view of an inception as per 2020. If you want to find out more about this subject and see if this new tax system will affect your business, you can contact our experts who can guide you on this matter on your benefit.