A new twist has been added to an old subject with the publication of a motion in the Swiss parliament in favour of stopping companies, including financial institutions, from deducting fines and other punitive financial sanctions from their taxes.

The initiative calls for a clear statutory basis for the taxation of punitive financial sanctions. The Federal Council – Switzerland’s ‘seven-headed president’ – is responding to this request with a bill. It has written: “With the exception of tax fines, the tax treatment of fines, financial penalties and financial administrative sanctions has not been explicitly regulated for companies up to now. In the future, punitive financial sanctions and associated procedural costs are to be expressly non-deductible for tax purposes. The same should also apply for other expenses associated with offences. In contrast, non-punitive profit disgorgement sanctions are to remain deductible.”

Parliament adopted a more stringent form of criminal law on corruption in September, resolving to regulate the ‘punishability’ of bribery payments to private individuals in the Criminal Code as offences prosecuted ex officio. This does not apply for minor cases, which are to be prosecuted only upon request. Previously, private sector bribery was punishable only if it led to a distortion of competition. In order to bring criminal and tax law into line with each other, the bill is proposing that bribery payments to private individuals should no longer be allowed as expenses that are justified for business purposes.

Meanwhile, assets worth US$115 million, stolen from Kazakhstan in a corruption affair, have been successfully and formally returned this month. Restitution in respect of the recovery of illicit assets has been a big cost for the Swiss over the years. Switzerland has returned about US$ 1.8 billion, more than any other international financial centre.