Dossiers - OECD minimum tax rate
Saying YES to the implementation of the OECD minimum tax
On 18 June 2023, the Swiss electorate will vote on the implementation of the OECD minimum tax in Switzerland. The proposal represents a broad-based compromise solution. Implementation of the OECD minimum tax will ensure that tax millions remain in Switzerland instead of going abroad.
Large, internationally active companies with an annual turnover of more than 750 million euros should be taxed at a rate of at least 15% in future as a result of the OECD minimum tax reform. If Switzerland fails to comply, other countries may levy a subsequent tax on our companies. The Federal Council, Parliament, cantons and business associations want to prevent tax money from being donated to other countries.
On the basis of the Federal Council’s proposal, a widely accepted new constitutional article was drafted for this purpose. This ensures OECD-compliant implementation while at the same time keeping tax revenue in Switzerland. The broadly supported compromise solution is to be adopted as part of the federal referendum on 18 June 2023.
Uniform minimum tax rate worldwide
What is it about? International companies with a global annual turnover of more than 750 million euros should pay at least 15% income tax in each country in which they operate. Such a global minimum tax has been developed by the OECD and the G20 countries and is intended to introduce a uniform minimum tax rate worldwide.
A total of 137 countries, including all G20 countries, are planning to implement the OECD minimum tax. The EU will introduce the OECD minimum tax on 1 January 2024. In Switzerland, the tax levied on many companies is currently less than 15%. A supplementary tax is therefore needed for the companies concerned.
Implementation of international tax regime in favour of Switzerland
The international OECD minimum tax project poses challenges for our country. The new constitutional article drafted by the Federal Council and Parliament on the implementation of the OECD minimum tax is in Switzerland’s best interest. Without it, countries in which internationally active Swiss companies also operate would be able to raise a subsequent tax to make up the shortfall to 15%.
Companies domiciled in Switzerland would also be faced with additional costs in the event of taxation in other countries and with legal uncertainty if the OECD minimum tax should not be implemented. A temporary ordinance should ensure that the Swiss minimum tax can enter into force from 1 January 2024, if necessary. For the special taxation of large companies, a constitutional amendment is needed, which requires both a popular majority and a majority of the cantons.
Tax revenue to remain in Switzerland
Switzerland is an export-oriented country with a small domestic market and competitive tax rates, and today benefits greatly in financial terms from its attractiveness as a business location. Many large, internationally active companies are headquartered in Switzerland. Thanks to them, the federal government’s income tax revenues have steadily increased, reaching around 14 billion francs in 2022 – more than private households contribute to direct federal tax.
Around 200 internationally active Swiss companies and 2,000 foreign companies domiciled here are affected by the OECD minimum tax. The federal government expects additional annual revenue of CHF 1 to CHF 2.5 billion from the future supplementary tax to make up the shortfall to 15%. In the long term, however, this additional income can only be generated if Switzerland remains an attractive location for companies and those companies pay taxes here.
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