The federal chancellery announced on Sunday that the plans had been rejected by 59 per cent of voters in a nation-wide referendum held last week, reports CityAm.
Switzerland’s government had sought to abolish ultra-low tax rates for multinationals, whilst preparing a package of measures designed to deter international businesses from leaving the country as a result.
"It will not be possible to find a solution overnight," Switzerland’s Finance Minister, Ueli Maurer, said in a press conference.
International bodies such as the European Union and OECD have been putting pressure on Switzerland to change its corporate tax rates. In 2014, Switzerland came to an agreement with the OECD to abolish the “special status” afforded to 24,000 multinationals operating in the country. Some of these businesses pay little over the effective federal tax rate of 7.8 per cent, due to favourable rates offered by Switzerland’s 26 regional cantons.
Figures from the Swiss government suggest that half of all federal corporate tax revenues in Switzerland come from these firms which together employ around 150,000 people.
The government's measures were approved in parliament but faced a national vote after 50,000 signatures were gathered in opposition, enough to trigger a referendum in the Swiss system. Switzerland’s second largest political party, the Social Democrats, were officially opposed to the measure, which they warned could result in 2.7bn SFr (£2.16bn) in lost revenue.
Commenting on the vote, Switzerland’s Green Party commented: "The conservative parties wanted to push through tax reform with arrogance and haughtiness against the interests of the people. The Greens demand a new proposal with a sense of proportion."
"It is extremely important that we find a solution within the coming two years," the head of Swiss business lobby Economiesuisse, Heinz Karrer, told Reuters.