Research
14 Jan 2022
Global Minimum Tax Rate
Impact on Switzerland
The OECD and G20 group of countries have introduced a ground-breaking tax deal, with close to 140 countries agreeing to the two-pillar approach which is designed to address the critical tax challenges arising from the global digitalisation of the economy. A key component of these changes will be the introduction of a global minimum tax rate, of 15%, for companies, especially, multinationals of a certain size.
Deloitte conducted a survey of Heads of Tax / senior tax professionals of large multinational companies operating in Switzerland to understand:
- their views and assessments of the forthcoming changes
- how these changes might impact the perceived attractiveness of Switzerland as a business location
Business factors
Business factors that are important to organisations and how Switzerland scores accordingly
- Switzerland scores very highly for having a stable, political and legal environment, busines friendly authorities, very well-developed infrastructure and a high quality of life
- The country scores less well in terms of the cost of doing business and in terms of ease of access to talent – be that at a local or global level
Business location - importance of specific factors to organisations vs. quality of these factors in Switzerland
Threat or opportunity?
Is the global minimum tax rate a threat or an opportunity for Switzerland?
- Over 75% of respondents believe the global minimum tax rate will pose a threat to Switzerland`s attractiveness, with 49% describing it as “definitively a threat”
- However, 9% feel it represents an opportunity with a further 14% believing its impact on competitiveness will be neutral
Is the introduction of a global minimum tax rate a threat or an opportunity for Switzerland's overall competitiveness, as a business location?
Attractiveness
- While the majority perceive that the attractiveness of Switzerland as a business location for various functions will remain unchanged
- Those functions that are expected to be most adversely affected are high quality manufacturing, procurement, R&D and intellectual property management
Impact of the global minimum tax rate on Switzerland`s attractiveness as a business location
Revenue allocation
- The introduction of a global minimum tax rate of 15% is likely to result in additional tax revenue for the authorities
- The survey respondents would like the following actions to be taken in lieu of this additional revenue: abolition of Swiss withholding taxes, reduction in social security costs and an increase in R&D subsidies
If the Swiss federal authorities choose to reinvest additional tax revenues which investment measures would be most effective?
Reto Gerber, Head of Tax, Deloitte Switzerland, on the probable impact that the global minimum tax rate will have on Switzerland
The abolition of the Swiss withholding tax as a compensation for the global minimum tax would be a win-win solution and would give the economy an additional boost within a few years.
Reto Gerber, Head of Tax at Deloitte Switzerland
