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Competences > • Technology Sectors > Technology Sectors

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BAK Taxation Index

The BAK Taxation Index enables systematic international comparisons of effective tax burdens and is an essential source of information for any investor, company, location promotion organisation. The BAK Taxation Index examines the attractiveness of company and highly qualified manpower taxation of 17 Swiss cantons and its most important competing location.
Since 2011 the BAK Taxation Index is complemented by an analysis of the sustainability of public finances. The sustainability of public finances is important for companies as well: locations that cannot keep their public finances on a sustainable trajectory are less attractive because of the risk of a higher tax burden in the future.

Update 2011

The most recent BAK Taxation Index was published in December 2011. The most important results are to be found in the figures below as well as in the published Executive Summaries and media reports. The access to the main report is restricted to the project sponsors (see project description below).

BAK Taxation Index 2011

Executive Summary

Press release from 29.11.2011

Sustainability of Public Finances

Press release


		Figure 1 shows the main result of the BAK Taxation Index 2011 for companies. In the figure the effective average tax rates (EATR) levied on companies in 2011 are indicated.<

Source: ZEW/BAKBASEL

Note: For Switzerland, the tax burden has been calculated for the capital of the canton (Kantonshauptort).
Other locations shown are the (economic) capitals of their respective regions. If more than one region is considered in a given country, the median location with respect to the EATR is shown.


		Figure 2 shows the main result of the BAK Taxation Index 2011 for highly qualified manpower (single, without children) with a after-tax income of 100.000 Euro. In the figure the effective tax rates levied on highly qualified manpower in 2011 are indicated.

Source: ZEW/BAKBASEL

Note: In Switzerland, the tax burden has been calculated for the capital of the canton (Kantonshauptort); in Belgium, Denmark, Finland, Italy, Norway and Sweden, it has been calculated for the capital of the country.
The colour of the bars is assigned according to the region: Swiss cantons (red), Eastern Europe (green), Scandinavia (purple), Continental Europe / Ireland / United Kingdom (blue), United States (brown) and Asia (yellow).


		Figure 3 shows the correlation between the effective tax rates of companies and highly qualified manpower in the BAK Taxation Index 2011. Thus, the figure summarises the figures 1 and 2.

Source: ZEW/BAKBASEL

Notes: In Switzerland, the tax burden has been calculated for the capital of the Canton (Kantonshauptort).
Red: AR: Appenzell Ausserrhoden, BE: Bern, BL: Basel-Landschaft, BS: Basel-Stadt, GE: Geneva, LU: Luzern, NW: Nidwalden, OW: Obwalden, SG: St. Gallen, SH: Schaffhausen, SZ: Schwyz, TI: Ticino, VD: Vaud, VS: Valais, ZG: Zug, ZH: Zurich.
Blue: AT: Austria, BEL: Belgium, DE: Germany, ES: Spain, FR/FK: France, IR: Ireland, IT: Italy, LUX: Luxembourg, NL: Netherlands, UK: United Kingdom.
Brown: USA: United States of America.
Green: CZ: Czech Repubic, HU: Hungary, PL: Poland, SK: Slovakia, SLO: Slovenia.
Purple: DK: Denmark, FI: Finland, NO: Norway, SE: Sweden.
Yellow: CN: China, HK: Hong Kong, SGP: Singapore.


		Figure 4 compares the taxation of companies (2011) with the sustainability of public finances (2008-2060) for selected locations. A negative (positive) revenue gap indicates that a sustainable (non-sustainable) long-tem budgetary policy is pursued. The extent of the revenue gap indicates by how many percentages of the GDP the tax revenue could be cut or

increased to reach exactly a public debt/GDP ratio of 60% in 2060.

Source: ZEW/BAKBASEL

Notes: Vertical axis: Revenue gap in % of GDP (2008-2060); Swiss cantons include municipalities and the federal government's assigned share. Excluding Norway, a statistical outlier on account of its oil revenues. Horizontal axis: Effective average tax rate for companies in %.

Methodology

The research has been conducted on behalf of BAK Basel Economics AG(BAKBASEL) and has been carried out in co-operation with the Centre for European Economic Research (ZEW) in Mannheim. The BAK Taxation Index includes all important taxes levied at both state and local government levels and shows the effective tax burden on companies and highly qualified manpower relevant for investors. The BAK Taxation Index 2011 examines the different tax burdens of over 80 regions worldwide. Whenever there are differences in tax regulations at the sub-national level, we take these into account and consider selected regional capital cities in a given country. Taxation of companies is a widely accepted location factor. Additionally, given competitive labour markets for highly qualified employees, companies have to compensate these highly qualified employees for international differences in labour tax levels. Both elements constitute a tax burden on companies and have an impact on a location’s attractiveness for investment decisions and are therefore integrated in the BAK Taxation Index. Since 2011 the BAK Taxation Index is complemented by an analysis of the sustainability of public finances. Of course, healthy public finances are not only an end in themselves. Rather, they are a significant factor in the attractiveness of a location. Hence, it is imperative for companies wrestling with long-term investment decisions to include the sustainability of fiscal policy in their decision-making process.

Short methodology of the BAK Taxation Index

Project description

The project BAK Taxation Index has been made possible with the commitment of the Swiss Federal Tax Administration (ESTV) as well as the Tax, Finance and Economics Departments of the Cantons Appenzell Ausserrhoden, Basel-Stadt, Bern, Glarus, Nidwalden, Obwalden, Schaffhausen, Schwyz, St. Gallen, Zug und Zurich. Exclusively the project sponsors have full access to all reports and data within the BAK Taxation Index. The project sponsors support an ongoing project which is constantly enhanced. In 2011 the BAK Taxation Index was expanded with a module to analyse the sustainability of budgetary policy. For the working period 2012-2013 several extensions are on the agenda, among others updating the existing indicators, creating an independent BAK Taxation Index web page and including the taxation of capital in the BAK Taxation Index.