Switzerland's political establishment was stunned when voters rejected a reform plan that would have brought the country's corporate tax system in line with international standards.
The tax reforms, which were widely supported by the business community, would have eliminated a set of special low-tax benefits that had enticed many multinational corporations to establish themselves in Switzerland.
According to experts, the future of Switzerland's tax system is now uncertain. The outcome of the vote could cause problems for companies that had been counting on their implementation, as well as deter companies from moving to the country.
"They do not know what [tax] measures will be available... That is not a very solid basis for making investment decisions," Peter Uebelhart, head of tax at KPMG in Switzerland, said in a video statement. Switzerland has come under intense pressure in recent years from G20 and OECD countries to clean up its tax system. If the country does not change its tax system by 2019, it risks being "blacklisted" by other countries.
According to Stefan Kuhn, head of corporate tax at KPMG in Switzerland, many voters rejected the tax reform package out of concern that it would reduce the amount of revenue collected by the government. This could have resulted in tax increases for the middle class.
Some companies with significant foreign operations benefit from preferential tax treatment under the current tax system. According to international tax authorities, the rules amount to unjust corporate subsidies.