Geneva may cut its corporate tax rate to about 13 percent as European Union pressure to abolish an existing tax regime threatens to drive out more than 900 multinational companies and commodity traders.
That may replace the existing standard rate of 24.2 percent as early as 2017, according to a presentation on the Geneva cantonal government’s website. The canton said it wants the Swiss federal government to help compensate for lost annual tax revenue of as much as 457 million Swiss francs ($490 million), according to the presentation.
Geneva is considering lowering the rate as the EU pushes Switzerland to abandon a so-called auxiliary regime that allows multinationals to pay less tax on income from outside the country. That permits more than 70 commodity trading companies, including Vitol Group and Trafigura Beheer BV, to pay an average tax of 12 percent, according to the Geneva Trading and Shipping Association.
This “is a very clear, attractive and welcome initiative,” Thierry Boitelle, a partner at Geneva law firm Bonnard Lawson, said in a statement. “The canton of Geneva has made clear that it intends to keep the many multinational and trading companies already present here and that it is in the business of attracting new companies as well.”
Companies that account for about a quarter of Geneva’s economy and employ about 20,000 people currently benefit from the auxiliary tax regime, according to the canton.