EU chief sounds doubts over Swiss company tax reform

BRUSSELS – European Commission chief Jose Manuel Barroso gave a cautious welcome on Monday to Swiss plans to abolish a tax loophole enjoyed by foreign firms, sounding "doubts" about the reform.

"I have learned about the next steps in the new tax reform. We are going to analyse these elements, which seem to us to be a step in the right direction," he said at a news conference with Swiss President Pascal Couchepin.

The Swiss government announced plans last week to abolish a status accorded to some foreign firms that offers tax benefits, in a bid to defuse a row with the European Union.

"We welcome the willingness to work on revising the regime but we have already expressed several doubts about the whole mechanism," Barroso said.

Foreign-based companies in Switzerland, which sometimes have no business activities in the country or only management functions, pay a lower rate for cantonal profit and capital taxes.

Under the reform, the status of these foreign-based companies, currently numbering about 10,000, would be abolished, scrapping the preferential tax rate they currently enjoy.

[AFP / Expatica]