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This Swiss canton is about to become the world’s top tax haven

The tiny Swiss canton of Nidwalden has unveiled a suite of reforms which will see it overtake Hong Kong in having the most favourable taxation rates for corporations.

Published: 24 July 2020 17:26 CEST
Updated: 25 July 2020 10:13 CEST

This Swiss canton is about to become the world’s top tax haven

Nidwalden is better known for chairlifts rather than low taxes. Photo: FABRICE COFFRINI / AFP

With a population of 43,223, the central Swiss canton of Nidwalden is one of the countries tiniest.

But a new set of reforms are set to put it on the map – at least for corporate clients.

The adoption of a set of tax reforms – partially motivated by the coronavirus crisis – will result in Nidwalden adopting a corporate tax rate of 9.8 percent.

Currently, Hong Kong has the lowest corporate tax rate in the world but will be undercut by Nidwalden if the changes take effect.

READ: Switzerland's strangest taxes – and what happens if you don't pay them

As reported in the NZZ however, other countries may follow suit – meaning there’s no guarantee that Nidwalden will stay number one for long.

A number of other Swiss cantons have also announced reductions in order to attract corporate clients.

In addition to Nidwalden, Uri and Schaffhausen have also slashed their tax rates, while Bern now comparatively has one of the higher rates in Switzerland.

The changes are not immediate however and are expected to take effect in 2025.

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Why Norway's earnings dropped in 2020 despite steady taxes from individuals

Photo: Giorgio Grani on Unsplash

While the state’s reduced income is linked to the Covid-19 pandemic, and the measures to combat the spread of the virus, individuals last year actually paid more tax than the year before. 0.8 percent, to be precise.

Yet the Norwegian tax revenue amounted to 858 billion kroner, 85.8 billion euro, last year, a 9.1 percent decrease from 2019, according to official figures from Statistics Norway (SSB).

Plummeting oil prices

The main driver of the decline is the reduced income from taxes on petroleum. The industry only paid 28 billion kroner, about 2.8 billion euro, in taxes last year. A staggering 80 percent drop from the 134 billion kroner paid the year before.

The petroleum industry is by far Norway’s largest economic sector. And, like all oil-exporting countries, Norway has been hard-hit by the sudden drop in demand – coupled with a global glut – for petroleum, noted, among others, by the OECD.

The impact of the pandemic on the international petroleum and crude oil market was undeniable when the barrel price plummeted from 45 dollars in March last year, to a record low at under 25 dollars in April. And all through the pandemic it fluctuated below 45 dollars, before eventually making a recovery in December, according to the overview from Business Insider.

Support investments

To help the industry weather the storm, Norway slashed its taxes and fees.

“Oil and gas industry is an important resource for Norway,” said Minister of Finance Jan Tore Sanner in a May press release.

“It is therefore important for the government to contribute to upholding the activity in the oil and gas industry and the suppliers to this industry in order to ensure that they make it through the Covid-19 crisis,” he continued.

The goal was to free up an additional 100 billion kroner, 10 billion euro, for investments.

Increased activity

The approach seems to have been successful. A recent report by the Norwegian Petroleum Directorate (NPD, ‘Oljedirektoratet’), concludes that activity on Norway’s continental shelf was bustling last year, despite the problems plaguing the industry in the rest of the world.

“While 2020 has been an unusual year in many ways,” said Director General Ingrid Sølvberg in NPD in a press release, “investments on the Shelf are at the same level as previous years.”

Fossil-dependent

Not everyone shares the enthusiasm, however.

Member of Parliament Kari Elisabeth Kaski from the Socialist Left Party thinks the investment level may increase Norway’s reliance on the fossil energy sector. This is particularly problematic, she believes, in a time where more resources and attention ought to be directed towards sustainable and green energy solutions.

“The reality is that one has given subsidies of such a magnitude that investments in oil have exceeded expectations,” she told newspaper Aftenposten in January.

“This makes Norway more dependent on oil, an unwise direction for Norway to take in the recovery of this crisis,” she continued.

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