Tax Proposal 17 – forced slow down for Vaud

in Tax, 14.06.2017

The Vaud authorities thought they had passed the hardest hurdle with the acceptance by their residents of a reduction of the profit tax rate to 13.79%. However, the uncertainty caused by the refusal of the Swiss Corporate Tax Reform III (CTR III) on 12 February 2017 continues to rule.

On 20 March 2016, the Vaud people passed  a legislative package with a clear majority, including among other factors, the amendment to the reduction of the tax rate  to 13.79%; related to the implementation at cantonal level of the CTR III. The refusal of the CTR III on 12 February 2017 interfered with the implementation of the Vaud legislative package and led to uncertainties, notably in terms of time line.

On 9 June 2017, the Federal Council drew up its main guidelines regarding the awaited Federal bill which will be commonly referred to as Tax Reform 17 and amongst others the proposition to decrease from 21.2% to 20.5% the amount of Federal income tax revenues retroceded to the cantons.

As a result, the Vaud Council of State will now have to ensure that its cantonal law will be sustainable from a finance perspective considering the final content of the Tax Proposal 17.

The Vaud Council of State was working on a report defining the recommended cornerstones and timeline which were planned to be submitted to the Vaud Parliament during the summer 2017. However, due the decrease of federal profit tax revenues recommended by the Federal Council, the Vaud Council of State communicated their intent to postpone this report to the first half year of 2018 on 13 June 2017, in order to ensure its alignment with the Federal legislative process of the Proposal 17.

It is regrettable that the recommendation of the Federal Council contributed to maintenance of uncertainties around the implementation of the accepted Vaud legislative package; regardless of there being no doubt that the intention of the Canton of Vaud remains similar.

KPMG will continue to keep you up to date regarding this key economic topic.

 

 

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