May 2023 / Switzerland

During its meeting on 17 May 2023, the Federal Council adopted the dispatch on the protocol of amendment to the double taxation agreement (DTA) with the United Arab Emirates. The protocol implements the BEPS minimum standards for double taxation agreements.

The protocol of amendment contains an abuse clause which refers to the main purpose of an arrangement or transaction and thus ensures that the DTA is not abused. It also supplements the provision on the mutual agreement procedure to bring it into line with the minimum standard.

The cantons and interested business sectors have welcomed the conclusion of the protocol of amendment. It still has to be approved by the legislator in both countries before it can come into force.

Source: Admin.ch

Switzerland's GDP adjusted for sporting events rose by 0.5% in the first quarter of 2023, following 0.0% growth in the fourth quarter of 2022. Domestic demand proved robust. Along with rising goods exports, manufacturing also registered a slight increase.

Growth in domestic final demand (+0.9%) was stronger in the first quarter than the historical average. Government consumption (+0.0%) stagnated, but private consumption (+0.6%) recorded substantial growth. In particular, there was a significant increase in consumer spending on services, such as mobility and tourism. Buoyed by the continued recovery in travel, value added in the transport and communication sector (+0.7%) and in the accommodation and food services sector (+1.0%) increased at an above-average rate.

Consumer spending on goods developed at a more moderate pace. Value added in retail trade (−0.4%) slightly declined accordingly, albeit from a high level. Bolstered by wholesale trade and car sales, trade as a whole (+2.1%) nonetheless posted a positive overall result for the quarter. Most other service sectors also registered positive growth in the first quarter, including the important sector of business-related services (+0.2%), the health sector (+0.7%) and the entertainment sector (+1.2%). Investment activity also contributed to the solid development of domestic demand in the first quarter. Investments in equipment (+2.6%) saw a significant rise. This was mainly attributa-ble to research and development and to vehicles, but the other categories also saw slight growth overall. Construction investment (–0.1%) was essentially stable. After a number of weak quarters, value added in the construction sector (+0.8%) rose again, driven mainly by higher sales revenues in civil engineering and specialised construction activities. Following three negative quarters in succession, value added in the manufacturing sector (+0.3%) again posted a slight uptick. The chemical and pharmaceutical industry declined at a high level (–0.6%). Value added increased in the other industrial sectors, however, with higher exports and sales in machinery and vehicles, for example. Exports of goods*** saw broad-based growth overall across the various categories and markets (+4.0%). On the other hand, exports of services (–0.9%) posted a decline. With exports of financial services contracting, value added in the financial sector (–4.1%) also fell noticeably, as in previous quarters. Meanwhile, there was an increase in imports of goods and services (+3.6%). Overall, the contribution of foreign trade to GDP growth was slightly negative.   Source: Admin.ch