Swiss voters clearly rejected plans to overhaul the corporate tax system, sending the government back to the drawing board as it tries to abolish ultra-low tax rates for thousands of multinational companies without triggering a mass exodus.
Most Swiss recognized the country needs reform to avoid being blacklisted as a low-tax pariah. But new measures proposed to help companies offset the loss of their special status breaks had created deep divisions.
Just over 59 percent of voters - who have the last word under the Swiss system of direct democracy - opposed the plans, which the country's political and business elite embraced under international pressure, provisional results on Sunday showed.
Finance Minister Ueli Maurer said the government now needed time to analyse and address with cantons the situation that business leaders called a dangerous legal limbo.
"It will not be possible to find a solution overnight," Maurer told a news conference in Bern, adding it could take a year to come up with a new plan and years more to implement it.
In the meantime, companies might stop investing in or even quit Switzerland, he said. He played down the risks of blacklists, saying the more immediate danger was that individual countries would start double taxation of Swiss-based companies.
The European Commission said it would comment on Monday.