On May 19 people in Switzerland will be voting in an important referendum about the country's tax system. Swiss people will be given a chance to cast their votes as to whether they want the Swiss tax system to undergo a reform that applies to tax rates and pensions.
Switzerland, which is not a member of the European Union and has in place systems of their own, is well-known around the world as a tax haven. They have much lower rates than the region and other developed countries, which is why many businesses are interested in doing some or most of their financial transactions there.
The Swiss voted in a similar referendum two years ago, when they rejected the change, preserving Switzerland's current financial status. However, because this gives them a very pronounced advantage over other financially developed countries, Swiss institutions and banks have faced a lot of criticism, pressuring the government to come up with a tax system that conforms to global standards and tones down this perceived unfair edge. According to the new plan, tax rates for international companies who have offices in Switzerland will go up (as they are currently more than twice lower than the rates applied to domestic businesses), while local Swiss companies will benefit from slightly lower rates, bringing the two types of companies to a more even standing. The proposal will also inject more funds into the swiss pension fund to ensure that the reform is not harmful to citizens' well-being.
If the vote fails again, Switzerland could risk a worsening relationship with the European Union and other international partners, and facing some form of sanctions when doing business abroad in the future.
