30/04/21

SWITZERLAND: Jurisdiction diplomatically rejects Biden’s ‘fiscal paradise’ label.

As published on swissinfo.ch, Friday 30th April, 2021.

The Swiss government has sent a letter in response to the president’s remarks which compared Switzerland to Bermuda and the Cayman Islands as a tax haven.

On Thursday, Finance Minister Ueli Maurer expressed surprise at the comparison but also downplayed its significance in statements to German-language public broadcaster SRF.

Switzerland “is a country that fully respects all its international obligations and is very transparent,” Maurer told SRF.

"I don't think that's the position of the (US) government, but the speech writers didn't know the real facts yet," he added.

Switzerland has contacted the Biden administration in writing, he said. Maurer also intends to make his views known personally at a meeting with his US counterpart Janet Yellen in a few weeks' time.

"I believe that such things can happen," he said. "The facts are totally different, so it shouldn't really worry us."

In his speech to the US Congress, Biden slammed 55 of the largest US companies for not paying federal income tax in 2020 while making over $40 billion (CHF36 billion) in profits.

“A lot of companies also evade taxes through tax havens in Switzerland and Bermuda and the Cayman Islands,” he said. “And they benefit from tax loopholes and deductions for offshoring jobs and shifting profits overseas. It’s not right.”

He said his government will reform corporate taxes so that such companies pay their fair share and help pay for the public investments their businesses will benefit from as well.

The US under the Biden administration is pushing for a worldwide minimum tax to dissuade multinational companies from shifting profits and tax revenues to low-tax nations.

That could be a problem for Switzerland which is home to some of the largest global companies and has one of the highest concentrations of Fortune 500 companies in the world.

Washington wants the global corporate tax rate to be at least 21%. Swiss cantons on average tax corporations at around 15%, according to consulting firm KPMG.

That goal is to conclude a global accord by mid-2021. The negotiations are being co-ordinated by the Organisation for Economic Co-operation and Development (OECD) and build on previous work to reform corporate taxation.