Switzerland has lost its tax appeal, says Nestlé chairman

THE chairman of food and drinks giant Nestlé said Switzerland was no longer the most attractive country for business taxes, challenging one of the nation's key selling points for corporations looking to move their headquarters.

"Today, there are other, more attractive locations with regard to tax, even within Europe," Peter Brabeck-Letmathe told shareholders of Nestl, Switzerland's biggest publicly owned company.

A Nestl spokesman said the tax comments were "a general statement" and that Brabeck-Letmathe wasn't referring to "any specific list" of countries with more favourable tax conditions.

Switzerland has attracted numerous international companies by only taxing earnings made inside the country and offering tax breaks for high-flying foreigners who relocate there.

But that advantage is eroding as other European nations, such as the Netherlands, Belgium, Britain and France, offer similar deals, according to Fred de Hosson of law firm Baker & McKenzie. "Almost all countries now exempt corporations' foreign income and most countries try to attract headquarters by giving tax benefits to expatriates," he said.

Brabeck-Letmathe, a long-time chief executive who became board chairman in 2008, said the country's reliable legal system was a big asset and that "Switzerland is important for Nestl".

But his comments on tax and a warning about the dangers of giving shareholders greater power over executive pay come at a time of growing anti-corporate anger in Switzerland.

On Wednesday, UBS suffered an embarrassing defeat at the hands of shareholders, who refused to absolve the bank's 2007 board of responsibility for failed investments and a US tax evasion case.

Meanwhile, Swiss politicians are debating a proposal to give shareholders the right to approve or reject executive pay packages.