Switzerland is a federal country.  It has 26 cantons (23 sovereign and 3 semi-cantons) and autonomous political communities numbering to almost 3,000.  Switzerland has always been a federal state since 1848.  There are seven members comprising the Federal Government.  These members take turn in acting as Switzerland’s president.  The country advocates a direct democracy which allows people to have a voice on the Swiss political affairs.  The government administrative and political duties have been correspondingly distributed to the federal, cantonal and the municipal government. 

The country has always been a neutral country and is neither a member of the European Union nor NATO.  This allows Switzerland to have a vital role in the world’s humanitarian affairs as well as to act as a intermediary between conflicting countries.  Worldwide call for globalization, however, has taken hold of Switzerland and the country is progressively leaning towards globalization.  It is also considering its options in relation to EU.

The Constitution of Switzerland retained the majority of sovereign rights of the Cantons, but has delegated a substantial authority to the Swiss Federal Government.  The country’s tax and legal systems are shaped by its system of government.  The country’s tax rates, though, are the lowest in Europe, which makes the country appealing to offshore incorporation.  The corporate tax rates vary from 16% to 25%.  In fact, some corporate structures could be taxed for as low as 10%. 

These low taxes could be credited to competitions on taxes between the canton and municipality levels.  Companies, though, are taxed at the three government levels – federal, cantonal and communal.  Despite the low tax rates in comparison to the rest of Europe, the cantons and municipalities of Switzerland levy the largest tax rates within the country’s tax system.  Companies are primarily taxed at the place where they carry out their business operations, based, or created.  Switzerland has a double taxation agreement with 33 various countries including Austria, Italy, France, Germany, and the United States.