Switzerland: Effects of “Tax Proposal 17” on Canton of Vaud

Switzerland: Effects of “Tax Proposal 17”

The Swiss Federal Council announced in June 2017 new guidelines regarding a federal tax bill, commonly referred to as “Tax Reform 17” and that would include a proposal to reduce from 21.2% to 20.5% the amount of federal income tax revenues retroceded to the cantons.

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Given this development, the Vaud Council of State now needs to examine its cantonal law and whether the canton’s governmental functions would be sustainable from a finance perspective considering the retrocession item of Tax Proposal 17. Previously, the residents of Vaud had accepted a reduction in the rate of the profit tax to 13.79%; however, the Swiss voters refused to back the Corporate Tax Reform III (CTR III) in the February 2017 referendum. 

The Vaud Council of State had been working on a report defining the recommended cornerstones and timeline planned to be submitted to the Vaud Parliament during the summer 2017. However, due to the decrease of federal profit tax revenues recommended by the Federal Council, the Vaud Council of State has communicated an intent to postpone this report to the first half year of 2018 so as to align its recommendations to the federal legislative process for Tax Proposal 17.

 

Read a June 2017 blog item posted by the KPMG member firm in Switzerland

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