How is Switzerland implementing the new global corporate tax? There is a lot at stake for the business location.
Large corporations in Switzerland are still benefiting from low taxes. In more than half of the 26 cantons, companies are currently paying less than 15 percent. Cantons such as Zug and Basel-Stadt are particularly attractive. They charge rates ranging from 12 and 13 percent on company profits.
With the OECD reform, the rate will rise to at least 15 percent. The tax bill of the large corporations increases. No wonder, the business umbrella organization Economiesuisse advocates implementing the new tax in such a way that the companies affected have as few disadvantages as possible and quickly know where they stand.
The reform cannot be stopped anyway, says Frank Marty, head of tax at Economiesuisse. «The minimum taxation must be implemented. If it is not implemented in Switzerland, it will be implemented elsewhere and other states will access the Swiss tax base.”
The claim is that something sensible is done with this additional tax revenue.
In fact, if Switzerland definitely does not introduce the OECD minimum tax, foreign tax authorities could demand the money from the companies. One way or another, Marty sees consequences for Switzerland as a business location: In the competition for internationally active corporations, the argument that taxes are cheap is losing weight.
That is why Switzerland must increasingly offer other advantages, for example by promoting research and development. “The claim is that something sensible is done with this additional tax revenue that Switzerland will have. The Swiss location should remain attractive for international companies.”
The additional taxes on profits are estimated at between CHF 1 billion and CHF 2.5 billion. These are additional burdens for the more than 2000 affected companies in Switzerland. But that is also considerable additional revenue for the state.
Distribution key gives something to talk about
And politically, the vote on June 18 is primarily about a controversy: should the cantons – as envisaged by the Federal Council and Parliament – get the majority of the additional tax revenue in order to strengthen their location? Or should at least half of the money go to the federal government for the benefit of the general public, as the SP is demanding?
Two cantons take the really big pieces of the cake.
For SP National Councilor Prisca Birrer-Heimo, it is clear that the proposed distribution key of 75 percent for the cantons and 25 percent for the federal government would lead to injustice. “The two cantons of Zug and Basel-Stadt will have almost half of this additional income. Because that’s where most of these companies are located,” criticizes Birrer-Heimo.
New distribution key if no to submission?
The voting proposal from June 18 leaves a lot of leeway as to how the cantons will deal with their additional income. It will first be decided whether they will receive 75 percent of the additional income. If the answer is no, Parliament could change this distribution key again. The reform would then have to go before the people again.
The SP national councilor compares the distribution with a cake that all 26 cantons want a piece of. “Two of them take the really big pieces. Almost half the cake is gone and the other 24 can make do with the leftovers.”
SP wants more money for the federal government
The SP is therefore demanding at least 50 percent of the additional revenue for the federal government. The business location should and can also be promoted at federal level, not only in economic cantons such as Zug or Basel-Stadt.
The money could then flow into infrastructure or vocational training to combat the shortage of skilled workers. “It should arrive throughout Switzerland and not just in a few cantons,” Birrer-Heimo demands.
One thing is certain: the reform is a stress test for Switzerland as a business location, because it loses at least part of the direct tax benefits for corporations.