Global corporate taxes: yes from Switzerland, but with restrictions

Berne accepts the principles of taxation of internationally active companies, with the degree of innovation and the size of States as a limitation

On July 1, 2021, the Inclusive Framework of the Organisation for Economic Co-operation and Development (OECD), of which 139 countries are currently members, published its principles for the future taxation of internationally active large companies.
Switzerland adheres to these principles for the purposes of further work, subject to its own reservations and conditions. The principles provide for a modest transfer of taxation rights to the countries of marketing and the application of a global tax rate of at least 15%.
Like a number of other countries, Switzerland has adhered to the principles, despite strong reservations, in order to allow the project to proceed, subject to specific conditions.

And Switzerland will chair the European tax body…

Focus on the interests of smaller and more innovative countries

Among these, it has expressed the explicit wish that the final formulation of the rules should take due account of the interests of small and innovative countries and that the implementation of the rules should respect national legislative processes.
In addition, the new rules should be applied uniformly in all member states, and for minimum taxation the right balance between tax rate and basis of calculation must be found. At today’s meeting of the Inclusive Framework, Switzerland took action in this regard.
The multilateral agreement is intended to avoid a tangle of national measures and thus create legal certainty. Numerous states, particularly the larger ones, had announced individual national initiatives in the event that a solution was not found with the OECD.
The companies located in Switzerland that are potentially affected by these principles had previously stressed the importance of a multilateral agreement.

Towards measures for a competitive Swiss economy

The agreement will affect turnovers over 20 and over 750 billion

The new rules are based on two pillars and will affect large, internationally active companies. The OECD is to work out the details of the project by the end of 2021:
the first pillar provides for a transfer of taxing rights to the states of commercialization. Companies with an annual turnover of more than EUR 20 billion and a profit margin of 10% will be taxed on the portion of their profits earned in the country of marketing. In Switzerland, the number of such companies is expected to be small;
The second pillar provides for a minimum tax rate of at least 15% for internationally active companies with an annual turnover of more than 750 billion euros. This threshold is exceeded by around 200 Swiss companies and numerous Swiss subsidiaries of foreign groups.

When the real problem is not the “how much” but the “why”

Swiss attractiveness to be reformulated by April 2022

At the same time as the further work of the OECD, the Federal Department of Finance, in close cooperation with other departments and involving the cantons, cities, the business sector and the scientific community, will draw up proposals for the attention of the Federal Council by the first quarter of 2022 that will ensure the attractiveness of Switzerland as a business location and are recognized internationally.
The OECD project was initially launched to improve the taxation of international digital groups that do not have a physical presence in the market.
In the course of the consultations, the focus shifted to the application of a general minimum taxation of large internationally active companies.

Taxation, sixteen fields of action for the Switzerland of the future