Global Daily Tax News, Swiss Gov't Signs Off On 0.5pc VAT Hike Plan, (Aug 18, 2026)

On August 12, 2026, Switzerland's Federal Council adopted a dispatch on a 0.5 percent hike to the Swiss value-added tax rate to boost funding for security.

The rate would be increased for a period of 12 years, the dispatch provides, alongside a lesser 0.3 percent hike to the special rate. The reduced rate, levied on food and medicines, among other things, would remain unchanged.

The Government said, "Switzerland's geopolitical situation and environment have deteriorated significantly in recent years. Due to austerity measures implemented over the past few decades, the army has critical deficiencies in capabilities and equipment, limiting its ability to effectively protect the country and its population from the consequences of the deteriorating security situation in Europe."

"To counter the most likely threats, particularly hybrid operations and long-range attacks, the armed forces will require an additional investment of CHF24bn in weaponry in the coming years. This will enable the protection of critical infrastructure, enhance sustainability, and identify threats at an early stage."

Parliament will now decide on the proposal, including how the increased funding will be allocated.