INTERNATIONAL TAX PLAZA - The Swiss Federal council opened a public consultation on a Draft Ordinance to implement a minimum taxation for large multinationals

On August 17, 2022 the Swiss Federal Council opened a public consultation on Draft Ordinance to implement a minimum taxation for large multinationals (Pillar 2 of the OECD’s Two-Pillar solution). As we already reported in our Article of June 23, 2022 in view of the time schedule the Federal Council has decided to proceed in stages. An amendment to the Constitution will empower the Confederation to implement the OECD/G20 project. In a second step, the Federal Council will regulate minimum taxation by means of a temporary ordinance. Afterwards, a federal law will replace the ordinance. The consultation period will run until November 17, 2022.

As explained above the Federal Council has chosen a step-by-step approach to implementing the OECD/G20 project on taxing the digital economy. The ordinance is the second of three steps and it temporarily regulates the minimum taxation in Switzerland by means of the introduction of a supplementary tax. This should ensure the minimum taxation of corporate groups with a worldwide revenue that exceeds 750 million euros.

Based on the amendment to the Constitution, which is currently under parliamentary deliberation, the minimum taxation will be implemented by means of a temporary ordinance (which is the subject of this public consultation) until the federal law that will replace the ordinance is drafted. To guarantee the compatibility of Swiss regulations with international regulations, the ordinance adopts the model regulations that were developed by the OECD/G20 by means of a reference in order. In addition, the ordinance specifies in particular the distribution of the cantonal share of the supplementary tax. The rules of procedure are still being developed and will therefore be submitted for consultation at a later date.

When deciding to bring the regulations into force, the Swiss Federal Council will examine how far implementation has progressed in other jurisdictions. At the moment the Swiss Federal Council assumes that the regulations will come into force on January 1, 2024.

For the purpose of the consultation the Swiss Government has released the following documents:

Ordinance on the Minimum Taxation of Large Groups of Companies (Minimum taxation ordinance) (available in the German, French and Italian languages);
An Explanatory Report (available in the German, French and Italian languages);
A letter to the cantons (available in the German, French and Italian languages);
A letter to organizations (available in the German, French and Italian languages);
List of consultation addressees.

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