Discounts for research strengthen locations
The tax breaks for research and development introduced in the course of the reform of corporate taxes strengthen the innovative strength of the cantons. Their flexible implementation has shifted the ranking among the cantons. According to BAK Economics, Bern, Zurich and Aargau are rising.
"With the Swiss tax reform and AHV financing (TRAF), instruments for tax relief for research and development activities were introduced at the beginning of 2020," explains BAK Economics in a press release . The economic research institute has examined the effects of these concessions on the tax burden of companies in the individual cantons.
According to the results, they reduce the effective average tax burden of a company on the Swiss average from 13.5 to 12.2 percent, explains BAK Economics. Very research-intensive companies could even reduce their exposure by an average of 4.3 percentage points to 9.2 percent. For the cantons, the benefits for spending on research and development (R&D) represented an internationally accepted substitute for the tax privileges abolished by the TRAF in addition to promoting innovation.
With the flexible implementation of the requirements by the cantons, the ranking of the cantons in the tax burden for very research-intensive companies has shifted, explains BAK Economics. The low-tax cantons of Nidwalden and Obwalden continued to occupy the top positions here. "However, some high-tax cantons with a generous design of the R&D instruments can significantly reduce their burden," writes BAK Economics.
Specifically, “the bottom three in ordinary taxation”, Bern, Zurich and Aargau, “for companies with very high R&D intensity towards the middle of the ranking”. The canton of Geneva has the highest average tax burden for companies with high R&D expenditure.