Switzerland has set into motion its commitment to stamp out tax avoidance carried out by many multinational corporations. The government has initiated a consultation procedure for country-by-country reporting for Swiss registered international firms.
If the proposal becomes law, firms would have to report their business activities and tax payments in each country. This is designed to stop companies funnelling taxable profits from high tax countries to those that demand lower levies.
The common practice has been heavily criticised for artificially draining tax revenues from both advanced and developing economies.
In January, Switzerland was among 31 countries to sign in Paris the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports. The agreement is part of the Base Erosion and Profit Shifting (BEPS) project launched jointly by the G20 countries and the Organisation for Economic Co-operation and Development (OECD).
The government proposes imposing country-by-country reporting on around 200 companies with annual turnover exceeding €750 million (CHF817 million).
Once gathered, the information will be transmitted to the countries where these companies do business. The data would be used for tax purposes only.
Various tax exchange deals will have to be ratified by parliament before there is a legal basis for country-by-country reporting in Switzerland.
Barring delays by referendums, the government expects to start gathering such data at the start of 2018. The first transmittance to other countries is expected to take place two years later. Just as with other tax exchange deals, Switzerland will choose which countries it wants to swap data with.