This content is from: Switzerland
Switzerland looks to remain competitive under global minimal taxation
René Zulauf and Manuel Angehrn of Deloitte Switzerland explain why the country prefers a multilateral solution to tackling questions on minimum taxation.

On July 1 2021, the OECD agreed on
the general outline of an inclusive framework with regards to the future
taxation of multinational enterprises. Switzerland, home of many multinational
companies and one of the most competitive countries for attracting multinationals, supports the OECD framework.
Switzerland much prefers a
multilateral solution on a global scale in this question, to a myriad of uncoordinated
attempts by individual countries to tackle minimum taxation with unilateral
legislation. A global solution on an OECD level will provide much needed
certainty and stability, a key element to enable businesses to plan, innovate
and grow.
While only a handful of Swiss
based multinationals will likely be affected by OECD pillar one (taxation of large
multinationals where the income is generated), OECD pillar two (minimum
taxation of 15%) will impact Swiss subsidiaries of foreign multinationals on a
broader scale.
A large number of Swiss cantons currently offer headline tax rates (effective
federal/cantonal/communal tax rates) below 15%, some of which are below 12%.
Indeed, inter-cantonal tax competition within Switzerland, where cantons
compete for taxpayers with hard factors, such as low tax rates, and even more
so with soft factors (applying a more business friendly, more reasonable
approach on all questions of taxation) is the key element that ensures the most
competitive tax environment possible.
Although a minimum tax of 15%
marginally narrows the differences in tax rates, the competitive spirit will
remain that ensures Switzerland will continue to offer a very attractive tax
environment for multinationals and keep its competitive edge internationally.
The OECD and G20 members have
committed themselves to a swift implementation of the inclusive framework with
a targeted ratification and incorporation into domestic legislation by 2023.
Anticipating the current momentum of the global commitment, the Swiss federal government
has been assessing domestic legislation since late 2019 and intends to publish
its legislative agenda and domestic implementation plan in early 2022, once
more technical details have emerged from the OECD working groups and after consultation
with cantons, political parties and interest groups.
Based on current discussions, Switzerland will introduce income inclusion rules to provide its domestic ultimate parent entities (UPE) with an efficient administrative procedure for compliance with the pillar two framework. The government is further reviewing its possibilities within the inclusive framework and accepted global standards to compensate businesses for the increased income tax burden from the 15% minimum tax. This includes measures such as the planned abolishment of the 1% capital issuance tax on equity contributions, an example of likely many to follow of how Switzerland will ensure to remain a very enticing jurisdiction for multinational companies.
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