The deadline for the referendum against the new Ticino tax law expired unused on 7 January 2020 and the corporate tax law adjustments entered into force retroactively on 1 January 2020.
The long wait is finally over. Canton of Ticino implemented the Federal Act on Tax and AVS Financing (TRAF) in its Tax Act. Together with the adjustments required by TRAF, the first step of the new law includes a reduction of the corporate income tax rate from 9% to 8% and of the cantonal tax base from 100% to 97%, dropping the average effective tax rate for corporates from 19.81% to 18.47%.
The main element of the tax reform remains the abolition of tax privileges (holding, mixed and principal companies), not compliant with the stringent international standards anymore. The transitional measures should avoid a tax shock for the companies benefiting from the privileged taxation up to 2025. In addition, the Patent Box regime ensures a lower taxation of profits from patents and comparable rights, with a reduction of 90% of the tax base. The increased R&D expenses of 50% for the calculation of the taxable profit is also part of the new tax package.
The tax reform will exploit its full potential in 2025, with a further reduction of the effective corporate income tax rate to 15.4% and the introduction of differentiated communal tax multipliers for corporates and individuals, with the aim is to maintain the tax competiveness of Ticino in a nationwide comparison.