Switzerland Considering New Bank Taxes

April 13, 2010 Taxation in Switzerland

It's all 'bout the money IIThe Swiss Government is currently investigating the possibility of implementing new tax measures for banks, levied on risk and excessive employee-bonus payments.

A Swiss Parliamentary committee is currently examining proposals on how to lower risk-taking and add extra stability to the nation’s banking sector. The committee is due to submit a final report with its recommendations before April 23rd. While most measures discussed within the report are expect to be revealed only upon its final release, two possible taxation measures have been announced early. The committee is investigating a proposal to implement a tax on bonuses issued to bank workers, as already implemented in the UK. The group is also considering recommending the Swiss Government to implement a “stability contribution” for banks, which would tax institutions based on the magnitude of undertaken risk.

The Swiss Finance Ministry and the Parliamentary committee has emphasized that the proposed bonus tax would differ from similar measures implemented by Governments of other nations. The current intention is to limit the amount of pay that an entity will be able to declare as a cost, and not imposing a tax on the payouts themselves. Elaborating on the point, Roland Meier, spokesman for the Swiss Finance Department, said that under the proposal: “…banks can pay whatever bonuses they wish. But they will only be able to deduct a maximum of 1.5 million Swiss francs ($1.42 million) per employee.”

In an effort to fund any future banking sector bailouts or instability caused by excessive risk taking by banks, the Parliamentary committee is examining possible constructs and methods of implementing a “stability contribution”. While the intention has been revealed, the committee is yet to disclosed the method which it will recommend to institute such a measure. Industry analysts believe that it will involve a bank-by-bank analysis of risk and an appropriately reflective tax burden.

Prominent banking sector and industry figures have so far opted not to comment on the possibilities and wait for the release of a final report. Summarizing the attitude, Thomas Sutter, Swiss Bankers’ Association spokesman, said, “At the moment we have no comment. We will be prepared to comment on the new proposals if they are formalized.”

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