Facts

The [A. AG] , a company with its registered office in [U.] /OW, is engaged in logistics services in the field of grain and raw material trading as well as advisory, brokerage and financial services. It was founded on 12 December 2013, with an intended asset contribution of the transport business of the [C. AG] (CHE-106.261.663) at a maximum price of CHF 2'000'000.-. Initially, the main shareholder and member of the Board of Directors was [D.] . The [C. AG] was founded in Geneva in 1988 and relocated its registered office to [U.] /OW in 2013. It traded in grains and raw materials and provided advisory and financial services. The Board of Directors consisted of [E.] (Chairman) and [F.] (Vice-Chairwoman).

On 30 November/4 December 2013, [E.] sold 30% of the shares in the [C. AG] to [D.] for CHF 9'000'000.-, financed by a loan from [E.] . On 13 December 2013, the [A. AG] acquired the transport business of the [C. AG] for CHF 1'850'000.-, also financed by a loan. At the same time, the [C. AG] repurchased 30% of its own shares from [D.] for CHF 1.-. In addition, the [C. AG] concluded a management contract with the [G. AG] (founded by [D.] to provide management services) for monthly payments of CHF 50'000.-.

On 19 December 2013, [D.] contributed 100% of the shares in the [G. AG] at a price of CHF 5'050'000.- (valued using the DCF method) to the [A. AG] , also financed by a loan. The tax administration of the Canton of Obwalden classified a loan of CHF 5'050'000.- as hidden equity in the 2013 assessment and set the taxable capital at CHF 2'444'000.-. It also considered the shares in the [G. AG] as non-value (market value CHF 112'000.-) and demanded a non-recognition of depreciation for tax purposes.

On 12 December 2014, the [A. AG] , the [C. AG] and the [G. AG] relocated their registered offices to [W.] /SZ. On 23 November 2015, [D.] sold 50% of the shares in the [A. AG] to the [C. AG] for CHF 2'400'000.-, with CHF 2'150'000.- settled by offsetting against a loan from [E.] . [E.] also assumed the positions on the Board of Directors of the [G. AG] and the [A. AG] .

The [A. AG] granted loans totalling CHF 215'000.- to the [I.] Limited (Ghana, 50% subsidiary) in 2016. The [I.] Limited had already been insolvent since February 2016. In its 2016 tax return, the [A. AG] declared a taxable net profit of CHF 47'233.- and taxable equity of CHF 271'057.-. The tax administration of the Canton of Schwyz assessed a taxable net profit of CHF 5'202'900.- and taxable equity of CHF 271'000.- for 2016, offsetting value adjustments on the participation in the [G. AG] (CHF 4'937'999.-) and on the loan to the [I.] Limited (CHF 217'700.-). The [A. AG] filed an objection and requested the cancellation of these offsets. The Cantonal Tax Commission of the Canton of Schwyz partially upheld the objection and treated the tax expense as an expense CO as a negative reserve. The Administrative Court of the Canton of Schwyz dismissed the appeal with a decision dated 14 March 2023. The [A. AG] subsequently filed an appeal with the Federal Supreme Court.

Considerations

The Federal Supreme Court first examined the formal objections raised by the appellant. The appellant alleged a violation of the right to be heard, as the oral hearing of 16 September 2019 had not been recorded in a transcript. The Federal Supreme Court held that neither federal law nor harmonised cantonal tax law provided for a right to an oral hearing in objection proceedings. Moreover, the obligation to record a transcript depended on the circumstances of the individual case and, in this instance, had not required any new relevant factual submissions by the appellant. The objection was therefore dismissed as unfounded.

In material terms, the appellant contested the tax treatment of the value adjustment on the participation in the [G. AG] and the loan to the [I.] Limited. The Federal Supreme Court confirmed the view of the lower court that the participation in the [G. AG] already had a market value of only CHF 112'000.- at the time of its contribution and thus constituted a non-value. The lower court had assessed the value using the net asset value method, which the Federal Supreme Court considered reasonable in view of the lack of earning capacity of the company and the uncertainty of the contractual payments. The DCF method was rightly…