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Switzerland to introduce part of minimum corporate tax deal in 2024

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The minimum taxation will be implemented in Switzerland with an amendment to the ordinance, which provides for the levying of a new supplementary tax in Switzerland. © Keystone / Christian Beutler

Large globally active companies will be taxed at a rate of at least 15% in Switzerland in the future. The Swiss government decided on Friday to introduce part of the OECD/G20 tax reform as planned on January 1, 2024.

The rapid implementation will prevent tax revenue from flowing abroad, the Federal Department of Finance (FDF) wrote in a press releaseExternal link.

The minimum taxation will be implemented in Switzerland with an amendment to the ordinance, which provides for the levying of a new supplementary tax in Switzerland. This required an amendment to the constitution. The people and cantons clearly approved this last June in a nationwide vote. After six years, the government must submit a federal law to Parliament.

+ Why did Switzerland wait until last minute to implement tax reform?

Switzerland is implementing the reform via a national supplementary tax, which will cover the difference between the current tax burden, below 15% in a majority of cantons, and the minimum tax rate. The tax rate will be applied to the profits of groups with a turnover that exceeds €750 million. The additional windfall is estimated at between CHF1 and 2.5 billion for the first year, 75% of which will return to the coffers of the cantons and and 25% to those of the federal government.

On Friday, the Swiss government said it was giving up for the time being on introducing a second part of the reform, specifically the international additional tax. In a press releaseExternal link, the government said that this part was unlikely to be applied in any jurisdiction in 2024, including member states.

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In early December, the government said it was waiting until the last minute to decide whether to introduce the OECD’s minimum taxation of large corporations. A key reason was to be sure that other countries were also implementing it. The vast majority of European Union states and several other western industrialised nations such as the UK and South Korea announced they would implement the reform in 2024.

Singapore and Hong Kong, by contrast, have announced that they do not intend to introduce minimum taxation rules until 2025. The United States has its own set of minimum taxation rules (GILTI) and is still not planning to adopt the OECD/G20 requirements. Countries such as China, Brazil and India currently have no plans to implement the minimum tax rate either.

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