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(Bloomberg) -- Switzerland, long an attractive location for corporations on the lookout for tax savings, is fighting to keep that standing.

Under pressure from abroad, it’s doing away with a special benefit for multinationals and plans to tax everyone from globally active commodity traders to corner bakeries at the same rate. Unhappy with the proposals -- which include a reduction in regional rates that could hit municipal budgets -- opponents are now forcing a referendum on the issue.

Switzerland’s plan to scrap the sweetener is its latest attempt to appease foreign criticism after ending its tradition of banking secrecy. Yet the change, which has been years in the making, may not be enough to maintain the country’s allure, with the U.K. already lowering its corporate tax rate and President-elect Donald Trump considering cutting the U.S. levy by more than half.

“If you think a board in the U.S. is influenced by the mountains in Switzerland or the rain in Dublin? No, it’s about maximizing shareholder value,” said Dominic Morgan, global tax and transfer pricing director at Zug-based ESAB Europe GmbH, a manufacturer of welding and cutting equipment with plants on four continents. “The tax reform is good, but it’s safe. And people elsewhere are doing bold things.”

Switzerland’s proposals will mean a cut to cantons’ tax rates -- imposed in addition to the federal levy -- and give companies a break for research and development via so-called patent boxes. Together with additional measures, that’s meant to compensate for scrapping the special status for multinationals, which employ about 150,000 people in Switzerland and generate half the federal government’s revenue from taxes on profits.

The reform has backing of 51 percent, though a significant proportion of respondents were still undecided, according to a gfs.bern poll. The vote is scheduled for Feb. 12.

Some opponents argue the move is too costly and hurts the middle class, though others say that while necessary, it isn’t ambitious enough to safeguard Switzerland’s competitive advantage longer term. Ireland has a corporate tax rate of 12.5 percent and Trump has proposed cutting the current U.S. one to 15 percent from 35 percent.

What’s undisputed is there will be a shortfall in revenue. The city of Zurich fears a yearly gap of as much as 300 million francs ($295 million) and may raise taxes on individuals to compensate. In Geneva, home to almost 1,000 multinationals, the move will leave a projected 440 million-franc hole in its finances.

Yet supporters say Switzerland has little choice.

“Any other option is worse,” said Christian Stiefel, CEO of SwissHoldings, the federation of Swiss-based multinational companies. “In tax terms, we have to be a jurisdiction among the top three in Europe.”

The government argues the reform is needed to prevent rising joblessness and an exodus of companies that could lead to potential tax losses of more than 5 billion francs a year. Peter Uebelhart, head of tax at KPMG Switzerland, says the numbers at stake in the event of a “No” vote could be “in the billions.”

According to Ruedi Noser, a member of parliament from the pro-business Free Democrats, the risk isn’t whether companies will leave Switzerland because of the reform. “It’s who will come in the next 20 years,” he said. 

To contact the reporter on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net.

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Zoe Schneeweiss, Jana Randow

©2017 Bloomberg L.P.

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