The steering committee incorporate of federal and cantonal representatives has adopted recommendations on a balanced corporate tax reform proposal III (TP17) on 1^st June 2017 for the attention of the Swiss Federal Council. The new proposals come less than four months after Swiss voters rejected a major renovate of the corporation tax aspect. Such Reform can have a significant impact on the tax burden of Swiss-based enterprises and permanent establishments. It is expected that the new corporate tax law will be enacted at 2020. The draft proposal incorporates the essence of these discussions and is designed as a recommendation to the Swiss Federal Council, which will craft the final proposal. One of the key objectives is to maintain Switzerland as an attractive tax and business location.

As per the guiding council TP17 ought to be organized in a balanced way, considering these goals. The key recommendations of the steering committee for TP17 are the following:

• Termination of the current special cantonal tax status (holding, mixed, principal, and current finance branch notional interest deduction (NID) regimes) for companies.
• The patent box will be accessible at the cantonal level and the maximum tax relief for income related to the patent box will be 90%. Additionally, the cantons may allow increased tax deductions for research and development (R&D) costs. Tax relief achieved through the patent box and/or the excess deduction for research and development (R&D) costs may be restricted, up to a maximum of 50%. The maximum tax relief on profits arising from the Patent Box and the R&D deduction may not exceed 70%.
• The partial taxation of dividends from qualified participation (minimum stake of 10%) should be 70% at federal level and at least 50% at cantonal and communal level. A tax relief of 30% on dividend income for private individual shareholdings will be granted in the future.
• Introduced a special tax relief measures of 70% at cantonal level.
• Increase of the cantons’ share of direct federal tax from 17% to 21.2% according to finance cantonal rate reductions and other corporate tax reform at cantonal level.
• Under the scheme, minimum family allowances would rise CHF30 per month for each child in full-time education.
• Increase of profit tax assessment for individual generous shareholders (at least 10%): Direct government impose: 70% duty base and Cantonal level: least 70% expense base as a financing and remuneration measure.

It is expected that the Federal Council will decide the essential parameters of the TRP 17 and decide on further procedures and the relevant timeline in June 2017. The corporate tax reform law (TRP 17) can then be presented to Parliament in the Spring Session of 2018.