OECD minimum tax rate: realism wins the day 

The Swiss electorate has voted clearly in favour of the OECD minimum tax rate, rightly choosing to safeguard legal certainty and Switzerland’s attractiveness for business. Now the tax reform has to be implemented, and it is up to the federal government and cantons, aided by the private sector, to do so in a way that minimises any adverse impact.

Clear “yes” vote is a win for business and the country

Just three or four years ago, the idea that Switzerland – with the full backing of business – would raise its corporate tax rates only five years or so after cutting them would have been dismissed out of hand. And yet, on 18 June, the electorate voted clearly and with admirable Swiss pragmatism in favour of the OECD minimum tax rate. The result authorises the Federal Council to implement the relevant ordinance with effect from 1 January 2024, adding Switzerland to the list of countries that subject multinational enterprises with annual revenues of at least EUR 750 million to a tax of at least 15% on their profits.

The Federal Council will take a formal decision on bringing the new regime into force at some point this year. This requires a critical mass of countries to join in implementing the OECD minimum tax rate. The Federal Council believes that the EU member states in particular will make up that critical mass. The European Union can be expected to implement the reform, and the Federal Council has indicated that it will be guided by the EU’s timetable. It is still unclear whether the US will follow suit, and how far the OECD minimum tax rate will be compatible with its domestic law, but this is unlikely to prevent the reform from coming into force.

What happens next?

Work is now proceeding both internationally and in Switzerland. Internationally, the reform has yet to be finalised. A set of regulations (the GloBE Model Rules), a commentary and administrative guidance have already been published, but many questions remain unanswered and others will not arise until the law is being applied. Further administrative guidance on these issues is to be expected. However, the OECD has already signalled its desire to withdraw gradually from the project and turn its attention to other priorities.

Here at home, the Federal Council opened the second consultation on the Minimum Taxation Ordinance at its meeting on 24 May 2023. This will last until 14 September 2023. The following comments can already be made:

  • One-stop shop: The Federal Council envisages a “one-stop shop” for levying the top-up tax. This would involve the economically most important entity of a group of companies paying the tax in its home canton for all entities across Switzerland. That canton would then transfer its share of the revenue from the top-up tax to the Confederation and to the cantons in which the other entities within the same group are based. This was an issue that the SBA raised in the first consultation on the ordinance.
  • Mixed taxation procedure: We also welcome the rule whereby the top-up tax is assessed as part of a mixed procedure, which addresses another of our concerns. While the companies affected will have to complete a tax return for the top-up tax, the fact that an assessment is carried out by the authorities will give enterprises greater legal certainty, especially because, in principle, it rules out any claims by other states.

The next major project at the national level now begins: within six years of the ordinance coming into force, the Federal Council must submit an ordinary law to Parliament. The following points are likely to be central:

  • Harmonisation measures: The big challenge of the minimum tax rate lies in the differences in the bases used to assess taxes between current Swiss law and the OECD rules. In many situations, this can lead to overtaxation, especially of qualified participations. The law must provide for appropriate harmonisation measures to prevent this unwanted outcome.
  • Compensatory measures for business: The voting documents mention that the additional revenue from the top-up tax can be targeted towards areas where the tax increase impairs Switzerland’s attractiveness to companies. This will no doubt lead to heated political debate.

All of this will be crucial to maintaining legal certainty and promoting Switzerland as a place to do business. The SBA will continue to offer its own constructive criticisms. 



Gabriel Bourquin
Senior Tax Analyst & Head Romandie
+41 58 330 63 44

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