TRANSFER PRICING IN SWITZERLAND

Switzerland has no comprehensive transfer pricing legislation. It has neither stringent transfer pricing documentation requirements nor harsh penalty rules. Tax audits in most of the cases are limited in scope and typically last for not more than a couple of days, if performed at all. Most of the tax issues can be discussed with the tax authorities in advance and binding tax rulings can be obtained. Given the relatively modest corporate income tax rates, which may range from as little as 8% to a maximum of approximately 28%, the Swiss tax administration is pretty relaxed as far as transfer pricing is concerned. Swiss tax authorities can and do normally rely on the assumption that if there is any shifting of profits in the international context, then it is from abroad to Switzerland rather than the other way round. Why then one could ask, should a Swiss taxpayer be concerned about transfer pricing?