GENEVA Jan 3 The managing director of oil
trader Vitol could move its headquarters from Geneva if
Switzerland hiked taxes on big commodity traders, and others
would do the same, Vitol's managing director said in comments
published on Friday.
"We could - and we wouldn't be the only ones - move the
domicile of our assets elsewhere," David Fransen told Swiss
weekly magazine L'Hebdo in an interview.
Switzerland has come under pressure from the European Union
to end so-called "fiscal holidays", including those which the
canton of Geneva offers to major trading firms such as Vitol,
Mercuria and Gunvor.
Geneva has proposed a flat 13 percent corporate tax rate for
trading houses, signifying a rise from the 11.6 percent paid by
the big firms but a cut for companies that do not qualify for
special tax breaks, who currently pay 24.2 percent.
Since the reform would leave a 460 million franc ($511
million) hole in the canton's budget, Geneva has said it cannot
guarantee the reform will get through.
Fransen said Vitol could live with a 13 percent tax rate but
Switzerland would suffer greatly if it doubled the tax rate on
big Geneva-based trading firms such as Vitol.
Vitol is privately held and does not publish detailed
financial accounts. But Fransen said its gross margin on sales
of $303 billion was "much less" than 1 percent.
Geneva is the hub for a third of the world's physical oil
traded volumes, according to the Geneva Trading and Shipping
Association. For Switzerland as a whole, the commodity sector
accounts for around 3.5 percent of gross domestic product and
employs around 10,000 people.
In April the co-owner of Gunvor, Gennady Timchenko, said the
trading house could move to Singapore, a rival trading hub, if
Switzerland became less attractive. However, Timchenko said he
was confident a solution would be found and added the company
was not looking to move.
Most global commodity firms already have branches in
Singapore, which can offer tax rates as low as 5 to 10 percent
through its Global Trader Programme.
Vitol has been happily based in Geneva for 47 years but
Switzerland was gradually accumulating disadvantages, such as
the cost of living, while Dubai, Singapore and even the United
Kingdom offered competitive tax regimes, Fransen said.
The slow pace of Swiss reforms, with a new tax regime
expected only in 2018 or 2020, ensures that companies have the
stability and long-term visibility that they need.
"But be careful not to take too long: some countries, like
Singapore, are making great efforts to attract new companies and
exploit the uncertain times that come with reforms."
($1 = 0.9008 Swiss francs)
(Reporting by Tom Miles, editing by William Hardy)