A proposal that would require corporations to be taxed in countries where profits are made rather than in the lowest cost jurisdictions has been published by the Organisation for Economic Co-operation and Development (OECD).
Following the announcement on Monday, Switzerland’s State Secretariat for International Financial Matters (SIF) wrote in a statement that it expected “the participation of the largest financial centres will lead to the creation of a level playing field for Switzerland and its competitors”.
The OECD report found that the profit rates reported by international corporations in low tax countries were on average twice as high as their worldwide profit rates.
“Switzerland supports international efforts to achieve greater transparency and a level playing field with regard to the taxation of multinationals,” the SIF statement said.
The new standards, known as the base erosion and profit shifting (BEPS) project and expected to be adopted in November by G20 leaders, will require countries to amend their laws and practices accordingly.
According to SIF, “Switzerland has already taken account of some BEPS project outcomes or is in the process of doing so within the framework of ongoing reforms”. This, it said, was specifically the case for corporate tax reforms, which included the abolition of certain preferential tax regimes.
The OECD estimates that governments are losing up to $250 billion (CHF244 billion) a year in tax revenues. Tax avoidance by corporations is nevertheless being achieved legally by exploiting gaps in existing legislation.
The Paris-based organisation said the loss of government revenues is of particular concern for developing countries, which are more dependent on corporate tax than developed states.
According to the State Secretariat for International Financial Matters, country-by-country reporting measures, which provide an overview of corporations’ global allocation of income and taxes paid, are being prepared.
In June, Switzerland said amendments to the country’s corporate tax regime were expected to cost around CHF1 billion ($1.03 billion) in tax revenues.
swissinfo.ch and agencies