Tax News Update    Email this document    Print this document  

May 18, 2022
2022-0795

Switzerland eliminates import customs duties on industrial goods as of 1 January 2024

The Swiss Federal Parliament has adopted the bill to unilaterally abolish import duties on almost all industrial goods and simplify the Swiss customs tariff to reduce costs for consumers and companies. This legislative change will enter into force on 1 January 2024.

Background

In late 2017, the Swiss Federal Council announced its plan to abolish import duties for industrial products (Harmonized system (HS) chapters 25 – 97), among other policies to tackle high prices in Switzerland.

After extensive debates, the bill to abolish industrial tariffs was accepted by both chambers of the Parliament in the final vote on 1 October 2021 and no subsequent referendum was launched. In consideration of the required lead time of involved parties for planning and (technical) implementation, the Federal Council decided that the tariff elimination will enter into force on 1 January 2024. With regard to the tariff elimination, the Swiss customs tariff is also to be reduced from currently 6,172 to 4,592 tariff codes.

Simplified import procedures and tariff classifications

Except for a few industrially produced agricultural products (such as albumin, dextrin or acid oils from refining as covered in HS chapters 35 and 38), the tariffs would be zero, meaning that all other industrial goods could be imported without paying any customs duties.

Impact on business

In general, import clearance for companies will likely be less burdensome as tariff classification will be simplified and companies will no longer need proof of origin to benefit from duty reductions in Switzerland. However, companies that manufacture with pre-materials, re-sell or process products sourced from other countries still have to comply with preferential origin-related rules of free trade agreements (FTAs) if their customers request certain proofs of origin. Thus, preferential proofs of origin are still needed and have to be declared for imported goods to ensure origin compliance. Furthermore, import value added tax, import licenses, excise taxes (e.g., vehicle tax, VOC) and the corresponding compliance will remain applicable even if there are no customs tariffs.

Actions for business

The elimination of almost all customs duties for industrial goods and the adaption of the Swiss tariff codes require sound planning by companies. Swiss-based companies should prepare early to ensure compliance and to avail of the opportunities that this change will bring. Businesses should:

  • Quantify the impact in terms of potential duty savings and compliance
  • Prepare master data (e.g., tariff codes, origin calculation) in advance to be compliant with the new structure
  • Update origin compliance procedures
  • Prepare assessments of third-party providers to ensure accurate declaration of imports
  • Explore new sourcing options and partner countries without existing FTAs to optimize supply chain (e.g., for pre-materials)
  • Assess possible domestic processing for (intermediate) manufacturing due to duty reduction
  • Evaluate current customs procedures for optimization

_________________________________________

For additional information with respect to this Alert, please contact the following:

Ernst & Young AG, Indirect Tax Services

 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 1996 – 2024, Ernst & Young LLP

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

EY US Tax News Update Master Agreement | EY Privacy Statement