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Switzerland tweaks offset policy

The flag of Switzerland. (Getty Images)

The flag of Switzerland. (Getty Images)

Switzerland has made several modest changes to its offset policy, which regulates the investment foreign companies must make in Swiss industry when selling military equipment to the European country, according to the Federal Office for Defence Equipment, which is also known as Armasuisse.

The updated policy, which takes effect on 1 July, imposes an offset obligation on a foreign prime contractor that receives a contract worth at least CHF20 million (USD21.6 million). Such a threshold did not exist previously. The new threshold also applies to foreign subcontractors if their share of a contract exceeds 50% of the total value.

Another revision gives Armasuisse greater flexibility to multiply an offset's value by a factor of up to three when the national security benefit is higher than the foreign supplier's financial expenditure.

The updated policy also provides greater clarity on the types of transactions that can be credited as offsets. Eligible activities include co- or licensed production and related subcontracts; the purchase of goods and services from Swiss ventures; the transfer of technology and expertise; project financing; and marketing support.

The manufacturing domains that may be considered for offset transactions include chemical and chemical products; rubber and plastics; non-metallic mineral products; basic metals; fabricated metal components; computer, electronic, or optical products; electrical equipment; machinery; and motor vehicles, trailers, or other transport equipment.

Other eligible domains include repair or installation of machinery; air transport; telecommunications; computer programming and related services; information technology services; architectural and related engineering activities; scientific research; and computer repair.

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