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Switzerland rules out negotiations with EU on tax row

Switzerland has rejected formal negotiations with the European Union in a bid to resolve a controversy over the country's corporate tax system, Swiss Radio International (SRI) reported Wednesday.

However, the Swiss cabinet said it was willing to have a dialog with Brussels on fiscal policy, but gave no date for talks, according to the report. Switzerland is not a member of the EU and it will not surrender its sovereignty on tax matters, the cabinet said in a statement. The statement came in the wake of a decision earlier this week by EU ministers to open official negotiations with Switzerland.
Brussels wants the Swiss authorities to scrap the practice of exempting tax on company profits generated in EU countries. It claims the current rule violates a 1972 free trade accord. Switzerland has repeatedly denied the allegation. Over the past few weeks several ministers have come out against holding formal negotiations with Brussels in the tax row.

Swiss Finance Minister Hans-Rudolf Merz said the cabinet and the cantons, which have wide-ranging autonomy in fiscal matters, wanted to ensure that Switzerland remains competitive. He added that the details of EU demands for amendments to the tax laws were not clear, but he warned that a total of 20,000 Swiss and foreign holding companies with a tax revenue of 7 billion Swiss francs ($5.8 billion) could be affected by changes. "We would have a serious problem without this revenue," Merz said. Switzerland wanted to remain outside the EU tax system, but was keen to continue its policy of bilateral treaties with Brussels, according to the finance minister. He said his ministry was preparing to hold talks with EU experts at some point in the near future but ruled out formal negotiations on the basis of the free trade agreement. In the meantime, Swiss Foreign Minister Micheline Calmy-Rey said Switzerland was committed to its obligations with the EU and called for Brussels to do likewise. "We will see whether the clear position of Switzerland is respected," said Calmy-Rey, who is also Swiss president this year. She added that Switzerland never refused to talk with Brussels. ”It's up to the EU to ensure that we achieve a result which satisfies both sides." Calmy-Rey said the differences of opinion over the tax issue should not jeopardize the relations between Switzerland and the EU. (