Act on Tax-Privileged Employment Creation Reserves (ABRG) - Principle (ABRG)

1. To promote a balanced economy and prevent unemployment, private sector companies may establish tax-advantaged employment creation reserves annually ("Reserves").

2. The canton and municipalities grant tax benefits to companies that allocate reserves pursuant to the Federal Act on the Creation of Tax-Advantaged Employment Creation Reserves.

3. Unless this law provides otherwise, the provisions of federal law shall apply.

1. Enterprises with at least ten employees are entitled to establish reserves.

1. Annual contributions are considered commercially justified provided that they do not exceed 15 percent of the calculation basis and reach at least CHF 10,000.

2. Reserves must not exceed 20 percent of the applicable annual payroll in accordance with the AHV legislation. The government council may increase this rate to 30 percent for particularly capital-intensive companies.

1. Insofar as federal law provides for the involvement of the cantons in the release of reserve assets by federal authorities, the Department of Construction and Economic Affairs is deemed the competent authority.

1. The annual contributions to the employment creation reserves are considered as business-related expenses for direct tax purposes.

2. The employment creation reserves are legally equated to the open reserves, which are formed from taxed income or net profit.

1. The canton and municipalities shall tax the dissolved reserve amount when the company

a) fails to properly provide proof of usage;

b) ceases its business activities;

c) relocates its headquarters or a permanent establishment abroad.

2. A full annual tax at the maximum rate is owed on the dissolved reserve amount, separate from the rest of the income or earnings. Offsetting with losses from the current or previous financial years is excluded.

1. The procedure for determining the tax relief and subsequent taxation is governed by the provisions of the Tax Law.

1. The unlawful obtaining of a tax benefit is subject to the penalty provisions of the tax law.

1. The Cantonal Council enacts the regulations necessary for the implementation of this Act.

1. This Act shall apply for the first time to the assessment of the tax year 1989.

2. Reserves under this Act may be established for the first time for financial statements pertaining to the year 1988.