Switzerland mulls corporate tax on bankers' bonuses

* Tax deductible ceiling on Swiss bonuses in the offing

* Proposals aim to complement new bonus rules

* Controversy drags on over UBS, C.Suisse bonuses By Martin de Sa'Pinto

ZURICH, April 12 (Reuters) - The Swiss Finance Ministry will consider putting a ceiling on how much bankers' pay can be charged as a cost before corporate income tax, a measure that would reduce the ability of banks to award outsize bonuses.

A Swiss parliamentary committee examining proposals aimed at limiting but not inhibiting banks' risk taking has asked the Finance Department to consider measures that include an indirect tax on bonuses.

"We are leaning towards proposals for a tax deductible ceiling, but we have to keep the competition aspect in mind," said a source close to the ministry.

"Other financial places do not have such severe rules on remuneration, so we have to be careful not to take measures that could put us at a disadvantage internationally."

There has been controversy around the world on bankers' bonuses as they have recovered sharply in recent months after being slashed or eliminated during the height of the financial crisis.

A proposal put forward by Social Democratic member of parliament Anita Fetz would put a limit on the amount of total employee pay that could be charged before corporate income tax.

"We are not discussing taxing the bonus itself. Banks can pay whatever bonuses they wish. But they will only be able to deduct a maximum of 1.5 million Swiss francs ($1.42 million) per employee," said Finance Department spokesman Roland Meier.

Industry players are waiting to look at the proposals from the committee, which is due to report next week. Parliament could be asked to decide on final proposals in its June session.

"At the moment we have no comment. We will be prepared to comment on the new proposals if they are formalised," said Swiss Bankers' Association spokesman Thomas Sutter.

"In Switzerland we already have a new remuneration system for bankers based on FINMA regulations," Sutter said, referring to the Swiss financial regulator.

BAILOUTS TO BONUSES New rules introduced in November have forced the largest Swiss banks and insurers to defer the bulk of its managers' bonuses to align overall pay with sustainable long-term profitability and curb excessive risk-taking.[ID:nLB995603]

Still, that will not prevent investors griping at this week's UBS (UBSN.VX)(UBS.N) shareholder meeting after the bank paid out about 3 billion Swiss francs for 2009 just a year after being bailed out by the government. [ID:nLDE63817K]

Credit Suisse (CSGN.VX) CEO Brady Dougan's five-year bonus plan also caused a stir after it left him around 71 million Swiss francs richer. [ID:nLDE62U1XM]

International banks have already been hit by bonus taxes introduced in key markets, including Britain and France, in the aftermath of the credit crisis, when many banks had to be bailed out by taxpayers. [ID:nLDE60I1I4]

However, UBS has argued that cutting its bankers' pay too drastically would make it easier for international competitors to lure away key staff.

Media reports of a possible tax on bank lending aimed at limiting the amount of lending were inaccurate, said Finance Department lawyer Fred Buerki.

"Our goal is not to implement rules that will prevent banks from providing money to consumers, businesses or investors," Buerki said .

Proposals to limit leverage at Switzerland's two largest banks, UBS and Credit Suisse, were still under discussion, he said. ($1=1.060 Swiss Franc) (Editing by Karen Foster)