Value-added tax (VAT) in Switzerland to be replaced with a tax on energy has been rejected by The Swiss Federal Council.
The council argued that in order to replacement of VAT because the rate of the energy tax will be very high and abolishing VAT would add to the financial burden on companies, far above a justified level according to the energy and climate policy. Because VAT is mostly neutral for external trade, a tax on energy would therefore penalize domestic companies compared to their foreign competitors, the Federal Council noted. Switzerland reduced VAT rate of 2.5% along with a special 3.5% rate for hoteliers. The Swiss Federal Council obligated to maintain its primary income source and attempts to change the existing system have been blocked by lawmakers. This includes plans to bring together the two reduced rates of VAT.
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