The minimum tax of 15% for large companies should come into force on January 1, 2024. The Federal Council on Friday put the OECD and G20 reform project for consultation until April 20, 2022. This reform represents major challenges for Switzerland. The competitive advantage of low taxation will become less important. Switzerland must preserve its competitiveness and create the necessary conditions to maintain jobs and tax revenues.
The OECD project provides for a minimum tax of 15% for companies whose turnover exceeds 750 million euros. States are free to introduce this minimum rate or not. Switzerland, known for having particularly favorable corporate tax rates, intends to align. An additional tax is provided. This will make it possible to bridge, for large companies only, the gap between the effective tax rate and the minimum rate of 15%. Affected groups will not have to bear additional tax procedures abroad.
Between 200 and 300 Swiss companies concerned
If Switzerland does not do this, the countries where a subsidiary of the parent company is located may demand the missing taxes. The money would then leave Switzerland. Similarly, Switzerland will be able to claim the balance from countries that do not tax large multinationals sufficiently. The project should enable Switzerland to collect additional tax revenue. The additional tax might yield between 1 and 2.5 billion francs.
The share collected from companies that are not sufficiently taxed abroad should be between 0 and 3 billion per year. Provided, however, that foreign countries do not implement the recommendations of the OECD, specifies the federal tax administration. However, the 15% tax should only affect companies that meet the conditions set by the OECD and the G20. Between 200 and 300 Swiss companies and 2,000 to 2,500 subsidiaries of foreign groups would be affected. Companies operating only in Switzerland and SMEs will not be affected.
Vote in June 2023
All of these additional revenues will go to the cantons. They should be reinvested to support Switzerland’s competitiveness. Different measures are possible to avoid an exodus of large groups. However, all businesses should take advantage of it. Including therefore those that are not affected by the minimum tax. Measures are also possible at the level of natural persons. Lower taxation of high incomes has been on the table in recent weeks. The latest plans that provided relief for businesses and the wealthy have failed in front of the people.
A modification of the Constitution is necessary to apply this differentiated taxation. It must be submitted to the people and the cantons on June 18, 2023 so that the project can enter into force on January 1, 2024. The Federal Chambers must have adopted the project no later than December 2022. A transitional ordinance should then allow the Federal Council to pay this minimum tax. It must empower the government to subject companies to different tax rates. The corresponding law will be adopted later by ordinary means.
A “no” is not possible, announced Ueli Maurer in January. Too many companies would leave Swiss soil. Tax losses would amount to several million francs and tens of thousands of jobs would fall by the wayside.
