ZUG, Switzerland The tidy towns and mountain vistas of Switzerland are an unlikely setting for an oil boom.
Yet a wave of energy companies has in the last few months announced plans to move to Switzerland -- mainly for its appeal as a low-tax corporate domicile that looks relatively likely to stay out of reach of Barack Obama's tax-seeking administration.
In a country with scant crude oil production of its own, the virtual energy boom has changed the canton or state of Zug, about 30 minutes' drive from Zurich, beyond all recognition. Its economy was based on farming until it slashed tax rates to attract commerce after World War Two.
It still has a chocolate-box old town with views over a lake to the high Alps, but is now surrounded by gleaming corporate offices -- including commodity trader Glencore and oil refiner Petroplus -- shopping malls and housing developments.
Local authorities say about 13 percent of full-time jobs in Zug canton are in the raw materials sector.
Over the past six months companies including offshore drilling contractors Noble Corp and Transocean, energy-focussed engineering group Foster Wheeler and oilfield services company Weatherfield International have all announced plans to shift domicile to Switzerland.
"Switzerland has a stable and developed tax regime and a network of tax treaties with most countries where we operate," Transocean Chief Executive Bob Long said in a statement in October, when it announced its move. "As a result, the redomestication will improve our ability to maintain a competitive worldwide effective corporate tax rate."
Guido Jud, head of Zug's tax office, said about 1,200 companies had set up shop there in 2008 -- in line with the long-term average, though it is difficult to assess how many of those are foreign companies until they file tax returns.
Swiss cantons are free to set their own tax rates. For example in Zug, corporate tax is about 16 percent but can fall as low as 9.5 percent for companies that do most of their business outside Switzerland. That compares with an average global corporate tax rate of 25.9 percent, according to consultancy KPMG.
"One trend that we see is that particularly Bermuda-based companies are now moving to Switzerland," said Martin Frey, a partner at law company Baker & McKenzie. "That may only partly be obviously for tax reasons, but also for security reasons and the fact that the Obama administration may go after them."
The moves come as the Alpine country is under pressure to stop providing a haven to rich individuals who have been illegally dodging taxes: the U.S. political climate could be contributing to the corporate relocations as authorities seek to crack down on tax avoidance and boost their own revenues.
A bill introduced in the U.S. Congress in March targeting "offshore tax dodges" by individuals and companies names Switzerland among tax havens for evaders.
Offshore tax abuses cost the U.S. Treasury an estimated $30-60 billion in lost revenues from corporation tax, plus $40-70 billion (29-50 billion pounds) from individuals, according to the office of Senator Carl Levin, who is sponsoring the bill.
Switzerland holds around $2 trillion of estimated global undeclared assets, according to the Boston Consulting Group. Revenue generated from this could be squeezed as a U.S. probe of its biggest bank UBS dilutes banking secrecy.
Yet analysts say the Swiss, whose GDP in 2008 was about 530 billion Swiss francs (331 billion pounds) according to the International Monetary Fund, are less likely to meet opposition to the low-tax regimes that draw foreign companies: these are deemed less harmful tax avoidance, rather than evasion.
"They are still making some money by having lower taxes on companies," said Lee Sheppard, contributing editor to Tax Notes, a tax journal based in Washington DC.
"But they're not ever going to be making the amount that other governments are annoyed about losing."
Analysts note that because Switzerland has its own tax treaty with the United States, blacklisting it at a corporate or individual level could cause unproductive diplomatic incidents.
Low-tax jurisdictions like Bermuda or the Cayman Islands look more vulnerable because they have less diplomatic clout, which is prompting some companies to head for Switzerland.
The European Commission, the European Union's executive body, has said the tax regimes in cantons like Zug, Schwyz and Obwalden are a form of state aid: it wants Switzerland to end favourable treatment of foreign-earned profits.
Switzerland, which is not a member of the EU, denies the cantons' special status violates its free trade deal with the bloc and rejects negotiations with Brussels on fiscal matters.
But it has pledged to consider some other company taxation regulations the EU has objected to, such as the status of foreign companies, aiming to ensure these go beyond thinly staffed headquarters to invest and create jobs in Switzerland.
Baker & McKenzie's Frey thinks more companies will shift to Switzerland, and Zug's Jud also highlighted the country's neutrality and reliability as an attraction to energy companies who do business in less stable countries.
"We are not reckoning on an unusually strong boom, but a continual and sustainable growth on the scale of the last few years and decades," Jud said.
Companies say Switzerland's attractiveness as a corporate location goes beyond tax to include easy and efficient transport, a high quality of life high and well-trained staff.
In the current climate, the attractions for the companies that move clearly outweigh one drawback: by making the switch they potentially sacrifice inclusion in stock market indexes such as the closely watched benchmark Standard & Poor's 500.
"In the past and most recently with Transocean, Standard & Poor's has ruled that the process of redomesticating to Switzerland renders a company 'ineligible for continued inclusion' in the S&P 500," said Macquarie Research analyst Angie Sedita in a note.
In buoyant times, inclusion in such indexes has offered access to equity capital. But the S&P 500 has fallen more than 50 percent since October.