Kraft owns a number of well-known global food brands

Hundreds of workers will move to a new HQ in Opfikon near Zurich, the US firm told the Associated Press news agency.

Kraft, best known for Ritz crackers and Philadelphia and Dairylea cheese, said the move was set to begin in summer 2007 and would take a year to complete.

Global firms enjoy low corporate tax by having European bases in Switzerland.

Trade agreement

Fellow multinationals General Motors, Hewlett-Packard, Procter & Gamble, and Pfizer also have European head offices in Switzerland.

Each Swiss canton, or state, sets its own corporate tax rates, which are often lower than those to be found in many EU member states.

The issue of taxation has been raised by EU states concerned about the increasing number of firms locating their European bases in the non-EU member.

According to the EU many of the tax privileges offered to companies break the 1972 free-trade agreement between Bern and Brussels.

Switzerland sees no connection between the agreement, which covers trade, and tax regimes.

'Banditry'

Corporate income tax in Switzerland is levied at federal, cantonal and municipal levels.

A recent survey by tax specialists KPMG in November 2006 said the average corporate tax rate in Switzerland - federal, cantonal and communal - stands at 21.3%.

This compares with 40.7% in Japan, 40% in the US, 38.3% in Germany, 12.5% in the Republic of Ireland and 10% in Cyprus. KPMG said the average across the EU was 25.8%.

Cantonal tax rates from the KPMG report included Obwalden at 13.1%, Schwyz 15.6%, Zug 16.4%, Zurich 21.3%, and Graub�nden 29.1%.