Set to enter into force in 2019, Vaud’s third corporate tax reform (CTR III-VD) offers a package that will place the canton among the most attractive in the country. Given its heavy reliance on special-status companies, a successful reform at federal level is urgently needed. Vaud is still one of the Swiss cantons with the highest tax rates for individuals.
The ‘Vaud Tax Monitor’ is a joint publication by KPMG and the Chamber of Commerce and Industry of Vaud (Chambre vaudoise du commerce et de l’industrie; CVCI) which examines the tax attractiveness of the canton of Vaud for both legal entities and individuals. Corporate taxes in this canton are currently among the highest in Switzerland. On 20 March this year, however, Vaud’s electorate overwhelmingly voted in favor of its CTR III, substantially cutting the canton’s profit tax rate. By reducing this to 13.79% from 2019, the canton of Vaud will have the opportunity to provide favorable long-term conditions that will benefit its future development and maintain its attractiveness. A further reduction of tax rates for individuals to consolidate this position would be welcome.
In terms of the implementation of CTR III at cantonal level, it is Vaud that has made the most progress in the legislative process. In March of this year, for instance, the canton’s electorate took a major step forward and overwhelmingly approved the draft CTR III with an 87.12% majority. With the introduction of a single tax rate of 13.79% that would apply to all companies from 2019, Vaud has set the benchmark for many cantons.
Mixed companies provided around 25,000 jobs in 2011, both directly and indirectly, or around 8.7% of all jobs available in the canton of Vaud. Accordingly, multinational corporations are extremely important for the canton in terms of their impact on the economy. They lay the foundation that safeguards both the development and the very existence of a large number of Vaud’s SMEs. All in all, the added value these companies create to the benefit of Vaud’s economy comes to around CHF 5 billion.
While enterprises with privileged tax status currently account for just 7% of all companies, they contribute around half of direct federal tax revenue. Accordingly, the success of the corporate tax reform is essential. CTR III is a vital reform to ensure Vaud’s economic sustainability and employment whilst maintaining its competitiveness at international level.
The ‘Vaud Tax Monitor’ is a systematic, intercantonal comparison of the tax competitiveness of the canton of Vaud, particularly with regard to neighboring cantons. It analyzes the canton’s attractiveness in terms of corporate taxation and revenue structure. The ‘Vaud Tax Monitor’ is a joint publication of KPMG and the Chamber of Commerce and Industry of Vaud (Chambre vaudoise du commerce et de l’industrie; (CVCI).
Media conference – slides (PDF, in French)
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