Insight into the new tax and regulatory regimes for …...Insight into the new tax and regulatory...

Insight into the new tax and regulatory regimes for commodity tradersgbf Geneva Spring Session, 2016

Manuel Claivaz, Partner, Geneva14 April 2016

Many ongoing changes to the business environment

• New tax regime

• FinfraG

• «Responsible business»

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NEW TAX REGIME

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New tax regime

TODAY

• Trading companies are subject to a privileged tax treatment (cant. level)

• «Société auxiliaire» status

• The tax rate for revenues generated by foreign operations same as ordinary rate but only a fraction of foreign revenues are taxed

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New tax regime

• In effect, it amounts to lowering the tax rate for foreign revenues (effective tax rate is 11,6%)

• Following EU pressure, special statuses have to be repealed

• RIE III

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New tax regime

TOMORROW

• RIE III provides for a range of compensating measures, e.g. licence box, R&D exemptions, notional interests deductions etc.

• Of interest:– Lower cant. corporate profit tax rate– Tonnage tax

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New tax regime

• Corporate tax rate

• 20.03.2016: Vaud has voted «yes» to 13,8% as from 01.01.2019

• Geneva: State Council wants 13%

• State Council has launched a round table to build a consensus between political parties, communes, trade unions, employers’ associations

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New tax regime

Next steps

• First session: tomorrow !

• Report on results at end of August 2016

• Shortly thereafter, bill to be submitted to Geneva parliament

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New tax regime

Tonnage tax

• Adopted in the National House but rejected in the Canton’s House.

• Differences resolution process underway

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New tax regime

• (Tentative) requirements

• Ship fleet strategically and financially managed in CH

• Minimal ratio of CH or EU-flagged ships

• Minimal ratio of ships operated by company as registered or beneficial owner

• Company must be carrying out business in the maritime economy, such as carriage of goods, chartering, ship/crew management, salvage/towing etc.

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New tax regime

• Profit to be calculated according to ship (net) tonnage

Federal level scale

• 0 - 1000 NT: 0,9 franc/100 NT/day

• 1001 - 10 000 NT: 0,7 franc/100 NT/day

• 10'001 - 25 000 NT 0,4 franc/100 NT/day

• >25'001 NT: 0,2 franc/100 NT/day

Cantonal level: tbd

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New tax regime

Example

• Assuming Vaud adopts fed. scale

• Ship with 10’000 NT CHF 700/day of profit

CHF 255’500/year (assuming full-year operations)

• Annual tonnage tax will be 255’500 x 13,8% = 35’233,45

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New tax regime

Exemption from ordinary taxes

• Tonnage tax replace profit tax (fed/cant) and capital tax (cant) but only for maritime activities

• Optional for cantons and for companies

• If opted-in, tonnage tax regime applicable for 10 years

• Early exit : retroactive calculation of ordinary profit and capital taxes but repayment is excluded

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FINFRAG

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FinfraG

• Wide-ranging regulation of derivatives

• Entered into force in 01.01.2016 with staggered application

• Introduces three main duties:– Clearing– Reporting– Risk mitigation obligations (confirmations, reconciliation, margin

requirements etc.)

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FinfraG

Scope

• Applies to OTC derivative contracts

• Full exemption for commodities derivatives with physical delivery (no cash-settlement option of one party) – forward contracts

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FinfraG

Scope

• FC v NFC, small or non-small ; trading companies are NFC

• Small NFC if 30-business day average below thresholds in each category (credit, equity, interest rate, FX, commodities), hedging transactions not included– Commodity derivatives: CHF 3,3 bn

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FinfraG

Clearing

• Only for sufficiently standardised OTC derivatives, to be listed by FINMA

• If small NFC no duty

• If non-small NFC duty in transactions with non-small entities

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FinfraG

• Timeline as from decision to subject a category to clearing requirement:

– 18 months for NFC, small or non-small

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FinfraG

Reporting

• Transactions between two small NFC no duty

• If cleared, CCP reports

• All other cases duty, reporting must be made only by one party (FC or non-small or seller-side)

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FinfraG

• Timeline as from decision to licence/recognise first trade repository:

– 9 months for non-small NFC– 12 months for small NFC

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“RESPONSIBLE BUSINESS”

17/03/2016 22

«Responsible Business»

• Payments transparency: draft bill to modify some aspects of the limited company law

• Included is the obligation, for companies involved in the production of commodities, and subject to standard audits (publicly held companies and other medium-to-large companies), to prepare an annual «payments report»

• Report would cover all payments made to foreign governments (if aggregate amount above CHF 120k)

• Federal Council would be granted the right to extend duty to commodity traders, but only in the framework of a coordinated international approach 23

«Responsible Business»

• New initiative launched in April 2015: «Entreprisesresponsables –pour protéger l’être humain et l’environnement»

• To put an obligation upon Swiss companies doing business abroad to respect internationally recognised human rights and environmental standards

• Swiss companies would also be liable for any damage caused by subsidiaries breaching such norms, unless due diligence is proved

• Signatures gathering process underway: deadline on October 2016 24

Thank you for your attention!

Manuel ClaivazAvocat, LLM maritime law (Lond)claivaz@gbf-legal.ch

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