Several cantons have finalized the cantonal legislative process and published the new cantonal tax laws. The respective tax accounting implications need to be considered by Swiss companies.


On 19 May 2019, Swiss voters approved the Federal Act on Tax Reform and AHV Financing (“TRAF”), which is applicable as of 1 January 2020. TRAF leads to the abolishment of several privileged tax regimes but introduces at the same time new tax reliefs that are in line with OECD guidance. One of the consequences of TRAF is the amendment of the Federal Tax Harmonization Act (“FTHA”) – a law that provides a framework for the cantons.

At federal level, the FTHA will be applicable as of 1 January 2020. At cantonal level, however, the measures of the TRAF will be implemented through modifications of the cantonal tax laws. The legislative procedure and timing of the implementation varies from canton to canton.

Additionally, several cantons will lower their ordinary corporate income tax rates as a consequence of TRAF. These tax rate reductions are normally included in the same legislative package as the other TRAF measures.

The enactment of the amended federal as well as cantonal tax acts leads to various tax accounting and reporting implications for companies applying an internal reporting standard (e.g. IFRS, US GAAP but also Swiss GAAP FER). In this article, the tax accounting implications as well as the current status of the cantonal implementation is outlined in more detail.

IFRS – Substantive enactment

For IFRS tax accounting purposes, a new tax law needs to be taken into account when it is substantively enacted. IAS 12.46 and IAS 12.47 require current and deferred taxes to be measured using tax rates/laws enacted or substantively enacted at the end of the reporting period.

Substantive enactment of the tax reform is only given once the cantonal legislative procedures are completed as the FTHA is only providing a framework to the cantons. In Switzerland, a law is usually considered substantively enacted:

  • once the new law is approved by the parliament and the referendum period has passed unused;
  • or the new law is enacted in a popular vote.

In the canton of Zurich, for example, the new cantonal tax law was substantively enacted in the popular vote of 1 September 2019. Subsequent steps like the publication of the law in an official gazette, are of a formal or administrative nature and do not change the content of the new law and are therefore irrelevant for IAS 12 accounting purposes. In the canton of Zug, on the other side, substantive enactment was given on 3 September 2019 as the referendum period had expired on that date without a popular vote being called.

US GAAP – Enactment

Pursuant to ASC 740-10-25-47, the effect of a change in tax laws or rates shall be recognized at the enactment date. The enactment date is when all steps in the process for legislation to become law have been completed. In Switzerland, the legislative procedure is usually completed with the publication of the law in the official law register. On federal level, for example, the publication in the official federal law register took place on 6 August 2019 which is considered to be the enactment date for the federal law on TRAF.

On cantonal level, similar processes may exist and a case-by-case analysis is needed for each canton in order to determine the applicable enactment date. Companies need to assess based on the applicable cantonal law when the legislative process is completed and whether the publication of the law in an official register is a key step so that the new law is binding for the companies and the administration. In the canton of Zurich, for example, the amended cantonal tax law was published on 25 October 2019 in the official cantonal law register.

The cantons follow several processes and time plans to publish new laws. In certain cantons, new laws are published and put into force on a regular, e.g. monthly or quarterly basis. In other cantons, however, this may happen on a rather irregular and ad-hoc basis.

Implementation status of cantons

Tax payers should closely monitor the updates on the legislative procedure in the relevant canton in order to correctly report the tax accounting implications in their quarterly, half-year or annual financial statements. The following map illustrates the cantons where the changes to the cantonal tax laws are already substantively enacted.

For US GAAP purposes, the following overview applies:


Swiss corporations are advised to assess the implications of the various Swiss tax reform measures as well as the respecting tax accounting implications, both from a content but also from a timing perspective. The time element is crucial to ensure that the resulting tax accounting and reporting implications are considered in the correct reporting period.

Please visit our website for further information regarding the Swiss tax reform.