Sales tax in Switzerland

tax-news

The Swiss Federal Council has adopted a supplementary bill pertaining to the simplification of the value-added tax (VAT) system in Switzerland.

The package provides that the three existing rates will be replaced by a single rate while the majority of exemptions will be abolished. Efforts to simplify the system in such a way are designed to strengthen the Swiss financial centre, to stimulate growth and to increase prosperity.

The first part of the country’s VAT reform, the new VAT law (la nouvelle loi sur la taxe sur la valeur ajoutée - LTVA), which has been in force since the beginning of the year, aims to improve legal security for those businesses subject to the tax. The introduction of a single, uniform rate of 6.2% and the abolition of most of the existing tax exemptions (21 out of a possible 29), will serve to further simplify VAT by removing problems associated with highly complex delimitation issues. It was during the adoption of the first part of the reform, that both the Swiss National Council and State Council elected to profoundly modify the Federal Council’s initial draft, as well as the conditions necessary for the introduction of a single rate and for the removal of certain exemptions, reflected in the latest bill.