Press release Federal Act on Tax Reform and AHV Financing (TRAF)
On May 19, 2019 Swiss voters voted in favor of adapting the Federal Act on Tax Reform and AHV Financing (TRAF). This represents an important step for ensuring that the Swiss tax system remains internationally competitive. The Canton of Zug will be able to comply with the requirement by the Swiss Federal Government to adapt the cantonal tax act as of 1 January 2020 to bring it into line with the provisions of the TRAF.
By voting in favor of the TRAF Swiss voters also voted in favor of reinforcing provision for old age. It will now be possible to counteract the impending financial difficulties of the AHV (Old Age and Survivors Insurance) through additional revenues of over 2 billion Swiss francs annually.
Important for the Canton of Zug
For the wellbeing of Switzerland and above all for Zug’s position as an economic location with an international projection, Zug needs a globally accepted and competitive tax system. In the opinion of Director of Finance Heinz Tännler: «The adaptation approved today to bring cantonal law into line with international standards will improve the acceptance of Switzerland’s tax system.» This will enable a reduction in the risk of being disadvantaged within the context of global trade. In the future the cantons will receive additional funds taken directly from federal tax revenues, allowing them to adapt their tax systems and offset any shortfalls in tax revenues.
Main features of implementation at cantonal level
The implementation of the TRAF provisions will take place in the Canton of Zug with a revenue-neutral reorganisation of cantonal taxation through adjustment of the cantonal tax law. «Whereas the existing privileged tax status for holding, domiciliary and mixed companies will be lifted, natural persons will not be affected by this tax reform», says Director of Finance Heinz Tännler explaining the concrete effects of the upcoming legislative changes. «Henceforth all companies will continue to be obliged, at the very least, to cover the NFA (new system of fiscal equalisation and division of tasks) costs incurred by them, in addition to an appropriate contribution to the costs of Zug infrastructure and public services.» Despite the implementation at cantonal level of the TRAF provisions the Canton of Zug will continue to be an attractive location for enterprises – both national and international.
Entry into force 2020
The cantonal government has already discussed the amendment to tax legislation to enable implementation of the TRAF provisions at the first reading. The second reading is scheduled to take place in June 2019. The changes will then come into force as required by the federal government at the beginning of 2020.
For further information, contact Heinz Tännler, Director of Finance, Canton of Zug, Tel. +41 079 223 81 66.