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As a small, open economy, Switzerland relies on an attractive tax policy. The tax burden is also moderate by international standards. Switzerland's tax policy serves to ensure tax receipts and strengthen the attractiveness of the country. It is characterized by both Swiss-style federalism and the international tax system, which is undergoing a sea-change.
Attractive company taxation as a locational factor
The Federal Department of Finance (FDF) and the entire Federal Council advocate tax competition within Switzerland as well as internationally. It is understood as an adjustment factor that spurs the state decision-makers to be economical with the financial resources entrusted to them. It forces the politicians and governments of competing locations to combine public services and the tax burden in an attractive manner.
Attractive company taxation and double taxation agreements (DTAs) are important factors in this regard. DTAs with the most important economic partners are fundamental. The aim of DTAs is to overcome obstacles for cross-border economic transactions.
International cooperation in tax matters
The number and diversity of international tax issues is steadily increasing. Switzerland is also affected by this development, and the country has a great interest in working together with other countries on tax matters. For this purpose, Switzerland participates in various international bodies that discuss topics of international tax law and that elaborate general standards. The focus here is on the OECD and the Global Forum on Transparency and Exchange of Information, which is responsible for monitoring the OECD standard on the exchange of information in tax matters.
But bilateral cooperation is also crucial. On 13 March 2009, the Federal Council decided to withdraw the Swiss reservation to article 26 of the OECD Model Tax Convention on Income and Capital. This allows Switzerland to expand information exchange with other countries upon specific and justified request. Implementation is undertaken by way of bilateral double taxation agreements that are being revised. Switzerland has since negotiated numerous DTAs on the basis of the OECD standard. This is another signal from Switzerland in favour of international cooperation and against cross-border tax crime, supporting an integrity-based Swiss tax and financial centre, including by international standards.
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