The «Corporate Tax Reform III» (CTR III) aims at maintaining Switzerland’s attractiveness for international headquarters. In the course of this tax reform, the Government of the Canton of Vaud, home to many multinationals’ international global or regional headquarters, published its roadmap on 4 April 2015. It shows how it will replace the various tax regimes questioned by the OECD with sustainable and effective new tax planning tools to maintain and even strengthen the attractiveness of the region.
On 29 September 2015, the Parliament of the Canton of Vaud adopted the cantonal CTR III with a great majority.
This significantly reduces the corporate tax rate from the current 22.33% to 13.79% by 2019. With 103 votes in favor, 6 votes against and 14 abstentions, the Vaud’s CTR III has passed the first political hurdle. It was a clear decision with an important message to the public that all sides had to make sacrifices because the reduction of the tax rate was linked to an increase in the social expenses.
Because the POP et solidaritéS parties have announced a referendum, the next step in the political process could be a public discussion, followed by a popular vote. Parallel to cantonal discussions, the CTR III will also be discussed in the Federal Parliament in the winter session (starting on 30 November), when the Council of States will kick off the debate. The debate on the Federal level will also have an important impact also on the Canton of Vaud, because the Federal Tax Harmonization Law sets (and might change) the framework for further changes in the cantonal tax regimes and because the entry into force of the Vaud CTR III is directly linked to the Federal law enforcement. The cantonal tax rate, however, is not part of it but entirely in the competence of the cantons.
KPMG is on the forefront of this political discussion, and will continue to keep you up to date regarding this economic key topic.