News
28.03.2023

Vote yes to the OECD minimum tax rate – to safeguard competitiveness and tax revenues 

For many years, Switzerland has successfully defended its leading position as a business location with an attractive tax regime. That strengthens our prosperity, and we all benefit from it. Now, another far-reaching taxation project from the OECD and the G20 states threatens the success we have enjoyed over recent decades. The proposed minimum taxation of multinational enterprises presents challenges for Switzerland and its tax system. The federal government, cantons and business sectors affected have conducted intensive consultations and come up with a viable solution which is in the interests of Switzerland as a whole. The electorate will have a chance to vote on it on 18 June 2023.

Around 140 OECD member states and the G20 have agreed on a new global project that, in future, will subject multinational enterprises to a minimum tax rate of 15%. If Switzerland fails to comply with the new rules, other countries will be able to collect the shortfall instead, helping themselves to the profits of companies in Switzerland that have been taxed at too low a rate. In short, if Switzerland doesn’t do it, others will. Foreign tax authorities mounting a tax grab at Swiss companies would damage Swiss tax policy in two ways: it would create new legal risks for companies, and it would mean Switzerland giving away tax revenues to other countries. The Federal Council, Parliament, the cantons and business want to prevent that, and are therefore arguing that the OECD minimum tax rate should be implemented in Switzerland. However, a new, purely Swiss top-up tax would be introduced on profits that are taxed at too low a rate. This would act as a defence mechanism to prevent foreign tax authorities from making claims against companies in Switzerland. The reform means that the companies concerned will pay more tax in Switzerland, while being protected against additional taxation and tax proceedings abroad. The referendum on the required constitutional amendment takes place on 18 June 2023.

Maintain Switzerland’s attractiveness

Competition between business locations will continue even after the OECD minimum tax rate comes into force: countries will carry on trying to attract and retain profitable companies. Until now, Switzerland has been extremely successful at doing so. An attractive tax policy has played its part in making our nation one of the world’s best locations for business over recent decades. Companies pay large amounts in taxes, and have been crucial to funding the steady growth in state provision, such as the social security and education systems. Needless to say, that is something that all Swiss households benefit from. We must now act to preserve that success. Implementation of the OECD minimum tax rate will provide the federal government and the cantons with financial resources to safeguard Switzerland’s attractiveness going forward.

The Swiss Bankers Association is in favour of Swiss implementation of the OECD minimum tax rate for a number of reasons, including the following:

  • It keeps tax revenues in Switzerland rather than sending them abroad: if companies have to pay higher taxes anyway as a result of the OECD minimum tax rate, it is right that they do so in Switzerland and not in other countries.
  • It is targeted only at multinational enterprises: the minimum tax rate affects only large companies that have international operations. For SMEs and companies that are only active domestically, nothing changes.
  • It provides legal and planning certainty: implementation in line with the OECD regime will protect companies against additional taxation and bureaucracy abroad and enable them to plan ahead with confidence, certain of their legal position.
  • It maintains Switzerland’s attractiveness: over the longer term, corporation tax revenues will only grow if the companies concerned stay in Switzerland and can continue to perform well here. The aim must therefore be to ensure that Switzerland remains one of the world’s best places to locate a business.

The whole country will benefit from this. That is why it makes sense for all voters in Switzerland to approve the proposal.

InsightTax

Authors

Urs Kapalle
Head of Tax Strategy
+41 58 330 63 00

Media Contact

Deborah Jungo-Schwalm
Senior Communications Manager
+41 58 330 62 73
Dagmar Laub
Head of Communications & Public Affairs - Member of the Executive Board
+41 58 330 62 06