TRAF: EXPERTsuisse Q&A on tax accounting impact under IFRS


On 19 May 2019, the Swiss public accepted the Federal Act on Tax Reform and AHV Financing (TRAF) in a public vote. In light of the developments in the various cantons to amend cantonal tax laws, companies reporting under IFRS may wonder how TRAF impacts their tax accounting.

Against this background, an EXPERTsuisse working group recently discussed and agreed on the answers to many important questions that will be relevant when accounting for TRAF. The respective questions and answers are summarized in a Q&A paper released on 5 July 2019.

In a nutshell, three important areas to consider are:

  • Substantial enactment: The federal reform is substantially enacted as of 19 May 2019 for IFRS. However, as TRAF needs to be adopted by the cantons in cantonal tax laws, the legislative procedures of both the federal and cantonal reforms need to be substantively completed to be seen as substantially enacted for IFRS purposes. Consequently, relevant substantive enactment is the date of the final decision on cantonal reform (i.e. public vote or expiry of the deadline for calling a referendum). The enactment of the cantonal income tax law results very often in reduced applicable tax rates and therefore re-measurement of deferred taxes.
  • Abolishment of special tax regimes transitional measures (e.g. mixed and holding companies): TRAF provides for two transitional measures on cantonal level, the (current law) step-up and the dual rate approach. If a company applies the step-up mechanism, this reflects a change in the tax base and therefore impacts the temporary differences of a company by either creating a deductible temporary difference or reducing existing taxable temporary differences. Consequently, the step-up results in a deferred tax asset (DTA) at the future ordinary tax rate or decreases a pre-existing deferred tax liability (DTL). The recognition of a DTA remains subject to the general analysis of recoverability. If the dual rate approach is applied, the tax base will not be impacted and consequently this measure does not impact the temporary differences. The dual rate approach can result in a reduced tax rate for temporary differences reversing in the next five years.
  • Other measures: The benefits of the other measures, in particular the R&D incentive, notional interest deduction and patent box should be treated as a reconciling item.

The Q&A paper provides further details on the above measures and related accounting questions under IFRS, e.g. which tax rate to be applied to measure deferred taxes, the treatment of entry mechanism to the patent box abolishment of the principal regime. For further information on TRAF itself, please refer to

If you would like to explore specific tax accounting questions, please contact KPMG’s expert Stefanie Altermatt for advice tailored to your organization.

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