First report on cantonal measures relating to the implementation of the OECD minimum tax

Bern, 08.08.2023 - The Federal Department of Finance FDF has published the first report on the expected effects of the implementation of the OECD minimum tax on the individual cantons and on the measures planned by the cantons. The report is based on a survey of the cantons as of 31 May 2023.

In postulate 22.3893, the Council of States Economic Affairs and Taxation Committee requested regular reports on the effects of the implementation of the OECD/G20 minimum tax on the individual cantons and an overview of the measures planned or implemented in the cantons. The Federal Tax Administration FTA conducted a survey of the cantons for this purpose.

The report shows that all cantons are addressing the implementation of the OECD minimum tax and considering potential new measures to strengthen their locational standing. Both adjustments in tax law and non-tax support measures are under discussion. The latter can include subsidy-like instruments, for example in the form of qualified refundable tax credits (QRTCs in accordance with OECD guidelines, see glossary) for investments in research and development, in reconciling work and family life or in sustainable technologies. Due to the dynamic international environment, most cantons can only outline possible courses of action.

Some cantons (AI, BE, GL, JU, OW, VS, ZH) currently have no plans for adjustments to corporate taxation, nor other tax or non-tax measures. In other cantons (BS, SH, SO), it was not clear on 31 May 2023 what adjustments would be made.

The remaining cantons have already considered adjustments to corporate taxation and/or the use of funds from the supplementary tax. However, many cantons are only at the beginning and the discussions remain vague. Exceptions, where legislation has already been passed or a consultation draft has been prepared, are AG, AR, BL, GE, LU and NE.

Receipts from the supplementary tax

The survey also asked for an estimate of receipts from the supplementary tax (see glossary). Half of the cantons, including some that will presumably generate significant receipts from the supplementary tax, have not produced any estimates of their own. If the estimates of the remaining 13 cantons are combined, the receipts from the supplementary tax (including the federal share) are estimated at just over CHF 500 million. If the estimates of the remaining 13 cantons are combined, the receipts from the supplementary tax (including the federal share) are estimated at just over CHF 500 million. An extrapolation for the whole of Switzerland is not possible due to the different cantonal situations.

Report following the postulate

The first report in response to postulate 22.3893 serves as a document for the consultations of the Committees for Economic Affairs and Taxes of the National Council and Council of States on the temporary ordinance on minimum taxation. As things stand, this is set to come into force on 1 January 2024. Further reports will follow in the dispatch on the implementing legislation that replaces the ordinance and in the reports on the implementation and effectiveness of the fiscal equalization between the Confederation and the cantons.

Glossary

Supplementary tax: levied if the minimum tax of 15% defined by the OECD is not reached. The supplementary tax is a federal tax. As with the current direct federal tax, it will be implemented by the cantons. 75% of the receipts from the supplementary tax will go to those cantons where large companies were previously taxed at a lower rate. This means that the receipts can be used in a targeted manner where the tax increase leads to a loss in a location's appeal. Some of the receipts will flow into the fiscal equalization system and thus benefit all other cantons as well. The cantons will make sovereign decisions on the use of their receipts, but must take appropriate account of the communes. The Confederation will be entitled to 25% of the receipts.

QRTCs: subsidies that can be offset against taxes. In order to qualify as income under the OECD Model Rules and not result in a reduction of the applicable taxes (including profit tax, capital gains tax or property gains tax), they must be paid out in cash after four years at the latest if they could not be offset against taxes by that time. This means that a QRTC is also paid out in the event of a loss.

Address for enquiries

Adrian Grob, Communications Specialist
Federal Tax Administration FTA
Tel. +41 58 464 90 00, media@estv.admin.ch