The Swiss finance minister, Eveline Widmer-Schlumpf, and her counterparts from European Union member states have signed a joint statement aimed at ending a controversy over corporate taxes.This content was published on October 14, 2014 - 14:48
The declaration, signed in Luxembourg on Tuesday, includes the Swiss government’s plans to push ahead with abolishing certain preferential tax regimes for foreign holding companies based on international standards by the Organisation for Economic Co-operation and Development.
In return, EU member states confirmed they would lift any sanctions taken against these regimes, according to a finance ministry statement.
“The agreement ends a bilateral controversy which has led to friction and to threats of severer countermeasures from the EU since 2005,” the statement added.
Widmer-Schlumpf stressed the importance of a “level playing field” between all the countries.
She also hinted that Switzerland expected neighbouring Italy to help resolve disputes about suspected tax evasion, according to the Swiss News Agency.
Last month the government presented wide-ranging plans for a corporate tax reform to be discussed by parliament.
Switzerland and the EU initialled a memorandum of understanding in July.
Ireland backs down
On the same day that Switzerland signed away its old “anti-competitive” corporate tax system, Ireland also pledged to abolish its controversial “Double Irish” scheme that benefits foreign multinationals.
Irish Finance Minister Michael Noonan told parliament that the system would be closed to new entrants from the beginning of next year and scrapped altogether by 2020.
Foreign firms, such as Google and Apple, take advantage of the Double Irish by funneling profits from their Irish subsidiaries to another Irish registered firm that is physically located in a tax haven - Bermuda for example. By doing so, the profits are ultimately taxed far below Ireland’s already generous 12.5% tax rate.
Whilst the practice is legal, the EU had put huge pressure on Ireland to abolish it on the grounds that it distorted competition.
Experts say Tuesday’s Irish announcement will come as a boost to Switzerland because the two countries compete to attract multinational headquarters.
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