As of: 1st of February 2024

Executive Summary
Switzerland implemented the OECD Minimum Tax in the form of a Swiss Supplementary Tax at the beginning of 2024. This places Switzerland at a significant and unwarranted disadvantage as a business location when compared to numerous non-implementing countries, including the USA, China, and India. Switzerland must vigilantly monitor international developments and strive to establish an internationally level playing field, placing increased emphasis on new instruments to enhance Switzerland’s attractiveness as a business location.
The OECD Project on the Taxation of the Digitalized Economy is grounded in two pillars and seeks to enhance the acceptance of International Corporate Taxation. The work is conducted by the OECD Secretariat on behalf of the G7 and G20, with administrative representatives of the involved countries actively contributing to the formulation of new rules. The newly established tax rules are formally adopted by the “OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting” (hereinafter: IF), which, at present, encompasses 143 countries.
On October 7/8, 2021, 136 of the (then) 140 members of the Inclusive Framework on Base Erosion and Profit Shifting (IF) adopted a statement outlining political parameters for the two pillars (IF Statement). These were officially endorsed by the G20 finance ministers on October 14, 2021. The specific parameters were deliberated in previous updates and have been duly reported. Pillar 1 (Taxation in the Market States)  Pillar 1 proposes that the largest international groups (a total of approx. 100 groups with more than EUR 20 billion in sales and a profit margin >10%) pay tax on a higher proportion of their profits in the countries where they sell their products. This is particularly relevant for digital groups such as Google, Facebook, and Apple, some of which currently pay minimal taxes on profits in the countries of product sales. Traditional industrial companies are also affected, facing high tax rates in the countries of product sales, with group tax rates ranging from 25 to 30 percent. In 2023, intensive work was carried out on Pillar 1 so that the finalised Pillar 1 implementation package, including a multilateral convention, can be submitted to the IF member states for approval at the end of March 2024. The signing ceremony is expected to take place in June 2024. The consultation on the question of signing is expected to take place in Switzerland between March and June. The global implementation of Pillar 1 relies on a critical mass of states ratifying the multilateral convention. Crucial to this is the ratification by the United States, as half of the companies affected by Pillar 1 are headquartered there. The planned redistribution from home states to market states cannot proceed without U.S. ratification, which necessitates a 2/3 majority in the U.S. Senate. However, strong opposition from both Republicans and Democrats raises doubts among experts, who believe Pillar 1 may struggle to secure a political majority in the USA. The failure to implement Pillar 1 may, in turn, amplify the efforts of the United Nations. However, it seems questionable whether the success of these endeavours can be ensured with the current composition. Pillar 2 (OECD Minimum Tax) Project Pillar 2 mandates that large companies (with a turnover of at least EUR 750 million) pay a minimum of 15% tax on their profits in each country where they operate. Profits are determined based on international accounting standards (e.g., IFRS, US GAAP, etc.) applied to published consolidated financial statements, reducing variations in profit determination across different countries due to the “true and fair view principle.” Additionally, the new international rules (known as GloBE rules) include various corrections, such as those for investments or deferred taxes.

The Minimum Tax imposed in accordance with the international standard within a country’s own territory is now denoted as Qualified Domestic Minimum Top-up Tax (QDMTT), or in the case of Switzerland, the so-called Swiss Supplementary Tax. In the event that a country does not adopt the new Minimum Taxation rules, the country of the parent company (utilizing the Income Inclusion Rule, IIR) or the countries of other group companies (employing the Undertaxed Profits Rule, UTPR) are tasked with taxing the disparity between the effective tax rate (e.g., 13%) and the minimum tax rate (15%) reported by the company for a specific country.

For global enforcement of Minimum Taxation, it is imperative that the UTPR be applicable to all countries without exception, including the head office countries. If (i.) the IIR can encompass all subsidiaries of groups headquartered in their own country and (ii.) the UTPR can cover all group companies of foreign groups, it becomes financially disadvantageous for states to abstain from implementing Minimum Taxation. Failure to implement Minimum Taxation would, at most, result in another country collecting the aforementioned tax difference. To minimize financial impact, a state must introduce at least a QDMTT. Conversely, if the UTPR has limited applicability, states and companies can deliberately confine the territorial scope of Minimum Taxation. This approach enables states that abstain from implementing Minimum Taxation to enhance their attractiveness as a business location, while companies can alleviate their tax burden. Presently, at the behest of the USA and many other countries such as China, India, etc., the UTPR is applied only to a very limited extent.

The Model Rules for Pillar 2 were published in December 2021 (Link Model Rules). The commentary on the Global Anti-Base Erosion (GloBE) model rules was released in mid-March 2022 (Link Commentary GloBE Rules). Due to a significant number of application issues persisting since then, the Implementation Framework regularly issues new detailed technical specifications, often in the form of Administrative Guidance. However, these specifications also introduce amendments to the commentary, some of which may contradict the Model Rules published in December 2021. With such dynamically evolving rules, achieving correct implementation becomes extremely challenging, if not impossible, for the concerned companies (as well as the involved countries).

Various segments of the Administrative Guidance were released in December 2022, February, July, and December 2023. Of particular significance were the provisions on the Transitional CbCR Safe Harbor, aiming to alleviate the administrative burden for the concerned companies in the initial years (2024 to 2026). In mid-July 2023, the Implementation Framework disclosed additional critical details, such as the GloBE Information Return (GIR) and various Administrative Guidances, including two new safe harbors (Qualified Domestic Minimum Top-up Tax (QDMTT) Safe Harbor and Transitional Undertaxed Profits Rule (UTPR) Safe Harbor). The Transitional UTPR Safe Harbor is especially noteworthy, as it provides a temporary exemption from the application of the UTPR, primarily adopted under pressure from the USA.

However, several requirements essential for accurate implementation remain outstanding. Optimists anticipate that the implementation rules will be fully established by mid-2024. Given ongoing differences of opinion among various countries on politically sensitive issues, further delays are foreseeable.

Not only Project Pillar 1, but also Project Pillar 2, is encountering significant resistance in the United States and is unlikely to be implemented in the US (for the foreseeable future). While the Biden Administration continues to contribute to shaping the rules, the US Congress vehemently opposes the introduction of OECD Minimum Taxation.

Following the release of supplementary guidance to the OECD Model Rules in February 2023 and the shift to a Republican majority in the US House of Representatives resulting from the mid-term elections in fall 2022, negative rhetoric against Pillar 2 has intensified in the US. Concerns about the Undertaxed Profits Rule (UTPR) have particularly become a major point of criticism. Members of the Republican House of Representatives and Senate have issued multiple letters and opinion pieces, calling for a comprehensive overhaul of the UTPR mechanism and threatening retaliation if these changes are not made. In May 2023, all Republicans on the House Tax Committee introduced a bill proposing additional taxes on individuals and businesses located in countries applying the UTPR. Republicans in the House of Representatives have also suggested eliminating funding for the OECD due to their involvement in drafting the problematic Pillar 2 rules as part of their fiscal year 2023-2024 Government Spending Bill. While it is unlikely that this retaliatory bill or the complete elimination of OECD funding will pass in this Congress, it foreshadows potential outcomes if Republicans secure a majority in both houses of Congress and the presidency in the 2024 US elections. Clear tension is evident with the Democratic Administration negotiating in the OECD talks.

Beyond the UTPR-related tensions, the Congressional Joint Committee on Taxation assessed the impact of Pillar 2 under various scenarios. It demonstrated that if all remaining countries in the Inclusive Framework enact Pillar 2 rules in 2024, while the U.S. enacts them in 2025 (the most likely time frame for U.S. action), the U.S. could lose nearly $60 billion in revenue over a 10-year period. The Joint Committee emphasized that these revenue losses could more than double if the US does not enact all elements of Pillar 2 or if the US attempts to replace existing elements of its tax code, such as the Corporate Alternative Minimum Tax (CAMT) or the Base Erosion Anti-Avoidance Tax (BEAT), with overlapping Pillar 2 measures. Republicans, and possibly even some Democrats in Congress, perceive this official Joint Committee revenue estimate as an indication that the U.S. Treasury has negotiated poorly on Pillar 2 with the OECD and has given away a sizable portion of the U.S. tax base as a result of these measures. This loss of revenue could motivate Congress to seek further changes or delays to the Pillar 2 rules.

In the meantime, it can be noted that the USA has achieved initial successes in this regard with the Transitional UTPR Safe Harbor adopted in mid-July.

In December 2022, the Directive on the Implementation of the OECD Minimum Taxation was adopted at the European Union (EU) level. This signifies the commitment of the larger EU member states to implement the OECD Minimum Taxation at the beginning of 2024. Currently, it appears that the vast majority of the larger EU member states will fulfill their obligations. Certain countries will retroactively introduce the rules in 2024 (e.g., Spain).

Outside of Europe, the enthusiasm for the introduction of the Minimum Tax seems to have largely dissipated. Except for Canada, Japan, Korea, and Australia, many countries are withholding announcements or consultation procedures. In any case, approximately three-quarters of the members of the Inclusive Framework have not implemented Minimum Taxation by the beginning of 2024. These members include economic heavyweights such as China and India. There are likely various reasons for this, with a significant one being the Transitional Undertaxed Profits Rule (UTPR) Safe Harbor adopted under pressure from the USA. As a result, countries introducing Minimum Taxation in 2024 will temporarily disadvantage their own groups (until the end of 2026) compared to groups from countries that do not introduce Minimum Taxation (e.g., USA, China, India, Brazil, etc.).

At the outset of 2022, the Federal Council formulated its approach for the implementation of the OECD Digital Taxation Rules. A proposal for an amendment to the Federal Constitution was put forth, encompassing a competency standard for both Pillar 1 and Pillar 2 of the OECD project. To expedite the implementation of OECD Minimum Taxation (Pillar 2) in the best interests of the tax authorities and companies, transitional provisions are to be incorporated into the constitution. Based on these provisions, the Federal Council is empowered to adopt a directly applicable transitional ordinance, effective from the commencement of 2024. The ordinance will subsequently be supplanted by Federal Law through the customary legislative process.


In December 2022, the Federal Assembly endorsed the implementation proposed by the Federal Council. A mandatory referendum was conducted on June 18, 2023, where more than three-quarters of Swiss voters approved the implementation decided by the Federal Council and Parliament. The resolution stipulates that 75% of the additional revenue from the Swiss Qualified Domestic Minimum Top-up Tax (QDMTT) and the International Supplementary Tax (Income Inclusion Rule (IIR), Undertaxed Profits Rule (UTPR)) should be allocated to the cantons from which the additional taxes originate. According to the transitional provisions, 25 percent of the revenue is earmarked for the Federal Government. How the cantons use any additional revenue from the Supplementary Tax will be determined at a later date, contingent on the amount of expected revenue and cantonal targets. Clarity regarding the actual revenue is likely to emerge one to two years after the introduction (i.e., in 2026).


Concurrently with the amendment of the Constitution, the Federal Council progressed with formulating the Federal Council’s Ordinance for the Implementation of OECD Minimum Taxation. As essential procedural and implementation regulations are yet to be specified by the Implementation Framework, the consultation on the ordinance unfolded in stages.


In August 2022, the Federal Council unveiled the initial draft ordinance, confined to two areas. To preempt disparities in the Swiss implementation of the Global Anti-Base Erosion (GloBE) Rules, the ordinance appropriately incorporated a direct reference to the OECD’s Pillar 2 model rules (inclusive of commentary and administrative guidance). This draft ordinance also addresses the apportionment of Supplementary Tax revenue among the cantons based on the source. Tax revenue from the Swiss Supplementary Tax is allocated to cantons whose companies/business units have remitted the Supplementary Tax.


In May 2023, the Federal Council introduced the second segment of the draft ordinance (Draft Ordinance 2). At its meeting on December 22, 2023 the Federal Council resolved to implement Minimum Taxation on January 1, 2024, focusing on the Swiss Supplementary Tax QDMTT. Simultaneously, the Federal Council published the definitive ordinance.


The trajectory of the OECD Minimum Tax at the international level is presently unpredictable. The global prevalence and adoption of the tax, particularly by major economic powers (USA, China, India, EU, Brazil, etc.), hinge significantly on the outcome of the US elections in November 2024 and subsequent adjustments to the Minimum Taxation rules by the Inclusive Framework (IF). The prevailing rules confer economic advantages to headquarters states that abstain from introducing Minimum Taxation. Consequently, three-quarters of IF states, including China, India, USA, Brazil, and others, have refrained from adopting the Minimum Tax. The absence of an effective Undertaxed Profits Rule (UTPR) or substantial adjustments to the calculation of the Minimum Tax level engenders significant uncertainty regarding the international proliferation of the Minimum Tax.

The existing regulations place Switzerland at a disadvantage, lacking objective justification. Notably, the current provisions permit the USA or China to afford their corporations effective tax rates significantly below 15 percent, without other nations having access to similar advantages. Switzerland, however, lacks the flexibility to provide comparable tax benefits to its corporations. These objectively unjustifiable disadvantages for Switzerland, coupled with protectionist advantages for other countries, warrant elimination by the IF to establish a level playing field.

The Federal Council’s resolution to introduce the Swiss Supplementary Tax raises myriad application issues for Swiss companies and raises critical questions about Switzerland’s attractiveness as a business location. The legislative and administrative complexities associated with implementing OECD Minimum Taxation pose significant challenges. Despite the intricate application concerns for certain companies, the more salient issues pertain to the locational disadvantages vis-à-vis competing jurisdictions.



SwissHoldings acknowledges the Federal Council’s resolution dated December 22, 2023, regarding the implementation of the OECD Minimum Tax in Switzerland. To avert financial losses, specifically lower tax revenues, over the medium to long term, Switzerland must prioritize two key objectives. Firstly, it should actively contribute to the establishment of a globally applicable Minimum Taxation Framework that ensures a level playing field. Secondly, both the Confederation and cantons should devise mechanisms to offset any locational disadvantages arising from heightened tax burdens on Swiss companies. The considerations encompassed within this Framework should include the following factors:

  • International Implementation of the OECD Minimum Taxation
  • Effects on the Attractiveness of Various Industries
  • Financial and Economic Consequences (short, medium and long term) without Countermeasures
  • Possibility of Creating Internationally Accepted and Targeted Location Measures
  • Effects Under Transfer Pricing Law
  • Domestic Policy Aspects

Weiterführende Dokumente
3. February 2023
Joint consultation response on compliance and tax certainty aspects of global minimum tax

25. January 2023
SwissHoldings comments on OECD public consultation document: Pillar One – Amount B

16. December 2022
OECD tax millions to stay in Switzerland

14. November 2022
Statement on the Ordinance of the Federal Council on the Minimum Taxation of Large Groups of Companies

26. October 2022
EATC wants 50/50 distribution of the gross profit from the supplementary tax

28. September 2022
Council of States approves OECD minimum taxation bill

26. August 2022
OECD digital taxation project: WAK-S largely follows Federal Council proposal

23. June 2022
OECD Digital Taxation Project: Message published

11. April 2022
SwissHoldings comments on the federal decree on the implementation of the OECD/G20 project on the taxation of the digital economy

11. April 2022
Vernehmlassungsantwort zur Umsetzung des OECD/G20-Projekts zur Besteuerung der digitalen Wirtschaft

4. March 2022
SwissHoldings comments on public consultation document: Pillar One – Amount A: Draft Model Rules for Tax Base Determinations

25. January 2022
2022: Steuerpolitische Weichen richtig stellen

13. January 2022
SwissHoldings begrüsst Umsetzungsplan zum OECD-Digitalbesteuerungsprojekt

6. September 2021
OECD-Digitalbesteuerung – Unternehmen diskutieren mit Verwaltung

16. February 2021
Das OECD-Digitalbesteuerungsprojekt könnte scheitern – mit potentiell negativen Folgen für die Schweiz

16. February 2021
Das OECD-Digitalbesteuerungsprojekt könnte scheitern – mit potentiell negativen Folgen für die Schweiz

2. February 2021
Steuerpolitische Prioritäten nach Corona – Fokus auf Wirtschaftswachstum, Wettbewerbsfähigkeit und Steuereinnahmen

14. December 2020
Public Consultation on Reports on the Pillar One and Pillar Two Blueprints – Joint comments by economiesuisse and SwissHoldings

10. December 2019
OECD/G20-Projekt zur «Besteuerung der digitalisierten Wirtschaft» – neuste Entwicklungen und Anliegen von SwissHoldings

10. December 2019
OECD/G20-Projekt zur «Besteuerung der digitalisierten Wirtschaft» – neuste Entwicklungen und Anliegen von SwissHoldings

2. December 2019
Public Consultation on the Global Anti-Base Erosion Proposal (“GloBE”) under Pillar Two Joint comments by economiesuisse and SwissHoldings

12. November 2019
Public Consultation on the Secretariat Proposal for a „Unified Approach“ under Pillar One – Joint comments by economiesuisse and SwissHoldings

7. November 2019
Globale Umverteilung der Unternehmensgewinne gefährdet Schweizer Erfolgsfaktoren

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