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Introducing an IP license box in Switzerland: quantifying the effects

Author

Listed:
  • Florian Chatagny

    () (ETH Zurich)

  • Marko Koethenbuerger

    () (ETH Zurich
    CESifo)

  • Michael Stimmelmayr

    () (ETH Zurich
    CESifo)

Abstract

Abstract In response to mounting international pressure to reform the ring-fenced elements of its tax system, the Swiss government has put forward a comprehensive tax reform package. The proposal comprises the introduction of a license box, a substantial reduction in cantonal profit tax rates, and an allowance for excess corporate equity. We apply a computable general equilibrium model to quantify the economic effects of this reform. Our results reveal that the license box, combined with the reduction in the cantonal profit taxes, limits the outflow of the tax base of those companies that benefit from the current preferential tax treatment. The reduction in cantonal profit taxes and the fact that regularly taxed companies additionally benefit from the license box render the reform package costly, such that tax revenues might well decline after the reform.

Suggested Citation

  • Florian Chatagny & Marko Koethenbuerger & Michael Stimmelmayr, 2017. "Introducing an IP license box in Switzerland: quantifying the effects," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(6), pages 927-961, December.
  • Handle: RePEc:kap:itaxpf:v:24:y:2017:i:6:d:10.1007_s10797-017-9441-8
    DOI: 10.1007/s10797-017-9441-8
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Florian Chatagny & Marko Koethenbuerger & Michael Stimmelmayr, 2017. "Introducing an IP license box in Switzerland: quantifying the effects," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(6), pages 927-961, December.
    2. Peter Egger & Marko Koethenbuerger, 2016. "Hosting multinationals: Economic and fiscal implications," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 67(01), pages 45-69, February.
    3. Florian Chatagny & Marko Köthenbürger & Michael Stimmelmayr, 2014. "Troisième réforme de l’imposition des entreprises: les effets économiques de l’introduction d’une licence box," KOF Analysen, KOF Swiss Economic Institute, ETH Zurich, vol. 8(3), pages 117-125, October.

    More about this item

    Keywords

    Tax competition; License box; Mobile firm profits; Corporate tax reform; Dynamic general equilibrium model;

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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