TP17: The tax loopholes for multinationals

SV17; Steueroase Schweiz
Effective Average Tax Rate in Swiss cantonal capitals compared to other countries (as % of profit). Source: SGB, ZEW/BAK Basel data
Profit shifting by multinational corporations to Switzerland is doing enormous harm to the countries of the global South. The present Tax Proposal 17 (TP17) will not change this. Alliance Sud research bears this out.

The Alliance Sud research published today on profit optimization and tax avoidance tools used by international corporations draws the following conclusions:

Switzerland should stop clinging to a tax system that deprives other countries of tax revenues. It should instead set about restructuring its corporate tax policy such that it helps realize the UN Sustainable Development Goals of the 2030 Agenda.

The Alliance Sud research shows that Tax Proposal 17 (TP17) continues Switzerland's previous strategy of low corporate taxation, contrary to the claims of many of its proponents in Parliament. The transition from the so-called "Swiss Finance Branch" to the interest-adjusted profit tax shows, for example, that with TP17, the same tax dumping vehicles will continue to operate, simply under another name. The analysis of "profit laundering" and double non-taxation with the help of the participation deduction also shows that TP17 is not closing down crucial loopholes in transnational offshore structures, in which Swiss subsidiaries play a key part.

By immediately eliminating and not replacing the old special tax regime, Switzerland could instead make a highly effective contribution to the socially and environmentally sustainable development of the world. Swiss policy-makers have the power to slow down the worldwide downward spiral in corporate taxes; as a leading global financial and trade hub, Switzerland has some economic policy levers at its disposal. The sooner it activates them, the less the harm to everyone.

If low corporate tax countries like Switzerland, the Netherlands, Luxembourg, Ireland and the USA forever keep passing "the hot potato" around amongst themselves, corporate taxes will at some point disappear from the world altogether. A race to the bottom that actually hits the ground would have catastrophic repercussions. It would thwart the fight against worsening social inequalities in the world and destroy much public infrastructure around the globe, ultimately undermining all efforts to preserve and further buttress democratic structures in nation-states, which are already under massive pressure in many places.

You can read the Alliance Sud response to the arguments wielded by the advocates of TP17 in the detailed conclusions at the end of the research paper.





Compassion with multinationals