That is why companies will soon have to pay 15 percent tax

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On June 18, Switzerland will not only vote on the climate law and the extension of the Covid 19 law, but also on the “Federal decision on a special taxation of large groups of companies”. This is probably the most complicated of the three templates. Blick tells you what you need to know about it.

Stop tax dumping! That is what the Organization for Economic Co-operation and Development (OECD) and the G20 want. They have drawn up a set of rules that ensure that large international companies must pay a minimum of 15 percent tax on their profits. Like about 140 other countries, Switzerland has agreed to participate. Since the tax rate is lower in most cantons today, it should be increased.

Only large companies should pay the 15 percent profit tax. Nothing else would change. To make this unequal treatment possible, the constitution must be amended. And the people and the estates have to say yes to that.

Because the introduction of a minimum tax is planned for early 2024, there will be no law (yet), but a regulation first. The law will be drafted later. Experts assume that this will only come into force in ten years.

Those companies would have to pay 15 percent profit tax

1. operate internationally and
2. generate a minimum turnover of 750 million euros per year.

Of the 600,000 companies in Switzerland, only a few hundred are domestic and a few thousand foreign business groups. This means that nothing will change for 99 percent of companies in Switzerland. But: The affected companies are important employers. According to the Federal Council, every fourth employee in Switzerland works for such a company.

Probably all. The profit tax rate is over 15 percent in eight cantons (AG, BE, BL, JU, SO, TI, VS, ZH). But special deductions, for example for research and development, can ensure that companies pay less than 15 percent here too. That has to be in balance.

It should work like this: If a group or one of its subsidiaries is taxed at less than 15 percent in a canton, he or she will have to pay an additional tax in the future to make up the difference from the 15 percent.

Estimates assume that at least initially 1 to 2.5 billion Swiss francs more will be collected throughout Switzerland. For the federal government, the financial impact of the reform is very uncertain – it depends on how other states and especially the companies behave. Because if taxes, which are low internationally, are abolished, Switzerland will become less attractive. If these certain profits are shifted to other states, there may also be less tax revenue.

For the time being, 75 percent of the revenue must go to the cantons and 25 percent to the federal government. This could then be changed into law, which should be drafted in the coming years. And it will certainly be tried: Because the distribution of the income is controversial.

The centre-left had demanded more money for the federal government, the SP and the Greens even rejected the deal because they did not get their way. They fear that the wealthy cantons with many such corporations and companies will collect more taxes and will therefore be even more dependent on the other cantons than is currently the case. Instead, they want the population across Switzerland to benefit from the additional revenue.

The affected cantons, on the other hand, say that the increase in tax rates will make them less attractive and they need the revenue to compensate. In addition, the less affected cantons received part of the income through the financial equalization system.

She is not legally obliged to do so. But: if Switzerland does not introduce a minimum tax, other countries can collect the difference between the lower tax rate in Switzerland and the minimum tax rate of 15 percent. Affected companies would have to pay taxes elsewhere. And from a Swiss point of view, that wouldn’t be very smart.

The Federal Council and the majority of parliament (SVP, FDP, Mitte, GLP) say yes to minimum tax. Cantons, cities and municipalities and most associations also say yes.

Groenen and SP rejected the proposal – because they think the distribution of the extra income is wrong. The SP believes that a no is not a danger – because then the Bundesrat and the citizens would present a new model with a fair distribution of income by the autumn. However, this position is not entirely undisputed: the SP Basel-Stadt, for example, decided to allow votes.

Source:Blick