Set back to Swiss VAT simplification
The Swiss National Council has rejected plans to simplify the Swiss Value Added Tax regime, proposed by the Federal Council.
The proposals were to reduce the three Swiss VAT rates to two. Currently, Switzerland charges three rates: 8%, 3.8% for hotels; and 2.5%. This was to mirror the EU VAT system, which only permits two rates, the standard VAT rate plus one reduced rate for socially sensitive supplies (e.g. public transport and foodstuffs). The plan had been to consolidate the two lower rates at about 3.5%.
The Council rejected the proposal as it considered the rise of the second reduced rate to potentially 3.5% would have an unfair balance on the poorest element of Swiss society.
The current 8% Swiss VAT rate is only a temporary measure, and will return to 7.6% in 2018.