New version of VAT law will come into force in Switzerland from january 1, 2018
Published: | 27.09.2017 | news
Switzerland has published a new version of the VAT Law which provides for a number of amendments. The changes are aimed at improving the mechanism for taxing of local companies with the value-added tax and they will come into force on January 1, 2018. To date, the foreign companies providing services in Switzerland are exempt from the VAT from Swiss turnover if it does not exceed 100,000 Swiss francs, that is equivalent to $ 103,726. In the opinion of the Federal Council, this has caused a decline in the competitiveness of the Swiss firms, especially in the border regions. According to the adopted amendments, on calculating the obligations of the company on VAT, its global turnover will be taken into account. The enterprises with world financial turnover of 100,000 Swiss francs or more will be subject to the VAT from their supply, starting with the first franc of the turnover amount in Switzerland. The introduction of a new system for mail-order companies has been postponed until January 1, 2019, because the Swiss post offices will need more time to implement the appropriate technical provisions. With the advent of this date, the mail-order companies will be subject to the value added tax if their annual turnover as a part of small batches that are not taxed upon import will be 100,000 Swiss francs or more. These enterprises will be obliged to levy the VAT from their customers that will be exempt from the levied taxes and customs duties on importing. In accordance with the new law, the scope of application of a reduced VAT rate (2.5%) will be extended to the electronic newspapers, magazines and books. Meanwhile, Switzerland will refuse to raise the VAT rate to the level of 8%, which should have served as a source of funding for the changes in the pension system. Moreover, from 2018, the tax rate will be decreased to 7.7%.