Swiss Voters Reject Plan to End Tax Breaks for Foreign Companies

Swiss Voters Reject Plan to End Tax Breaks for Foreign Companies

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Ueli Maurer, the Swiss finance minister, on Sunday. After voters rejected a proposal on corporate taxes, he said, “It will not be possible to find a solution overnight.”

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Pierre Albouy/Reuters

ZURICH — Voters rejected plans to overhaul Switzerland’s corporate tax system, according to provisional results on Sunday. The vote sends the government back to the drawing board as it tries to abolish ultralow tax rates for thousands of multinational companies without leading to their mass exodus.

Many Swiss citizens believe that the country needs changes to avoid being blacklisted by other countries for its low taxes. But new proposals to help companies offset the loss of their special-status breaks have created deep divisions.

The results on Sunday showed that just over 59 percent of voters — who have the last word under the Swiss system of direct democracy — opposed the plans, which the country’s political and business elite embraced under international pressure.

Ueli Maurer, the Swiss finance minister, said the government now needed time to address with the cantons — or Swiss states — a situation that business leaders have called a dangerous legal limbo.

“It will not be possible to find a solution overnight,” Mr. Maurer said at a news conference in Bern, adding that it could take a year to come up with a new plan and years more to enact it.

In the meantime, companies might stop investing in or even leave Switzerland, he said. He played down the risks of blacklists, saying the more immediate danger was that individual countries would start double taxation of Swiss-based companies.

The European Commission said it would comment on Monday.

Switzerland has been criticized by the European Union and the Organization for Economic Cooperation and Development over the special tax status that the cantons give foreign companies. Some pay virtually no tax above an effective federal tax of 7.8 percent.

In 2014, Switzerland agreed with the O.E.C.D. to abolish by 2019 the special tax status, which has been an attractive perk for around 24,000 multinationals looking to decrease their tax bills. That provision is now expected to remain in place past the original deadline.

The government says such special-status companies employ 150,000 people and contribute half of the federal corporate taxes.

To offset the blow to companies, the government had proposed tax breaks on research and development in Switzerland, profits from patents developed there, and deductions for excess company equity.

In addition, many cantons have said they would decrease corporate tax rates for all companies to reduce the fiscal burden and dissuade multinationals from leaving.

After the Federal Assembly approved the measures last year, critics gathered the 50,000 signatures needed for Sunday’s referendum, which overturned the parliamentary vote.

The “No” campaign was led by a coalition including the Social Democrats, the Greens, trade unions and churches, which feared that the public would bear the brunt of reduced company tax revenue through cuts in services or higher personal taxes.

“The conservative parties wanted to push through tax reform with arrogance and haughtiness against the interests of the people,” the Green Party said of the vote.

The stakes are high for Switzerland, which is already coming to terms with the end of its long-cherished tradition of banking secrecy. If multinationals pull out of the country, its economy could suffer.

The debate comes as President Trump is considering slashing corporate taxes in the United States, and Britain has hinted that it could cut its rates when it leaves the European Union.

“It is extremely important that we find a solution within the coming two years,” said Heinz Karrer, president of the Swiss business lobbying group Economiesuisse.

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