Taxation

The OECD Digital Taxation Project has faced major challenges, particularly since Donald Trump took office as U.S. President. The new Administration has announced that the United States will withdraw from the project and take countermeasures, such as imposing tariffs on countries that introduce discriminatory or extraterritorial digital taxes targeting U.S. companies. The Trump Administration has 60 days to outline specific retaliatory measures, which are expected to target both the UTPR under the global minimum tax framework and digital service taxes imposed by other countries. Additionally, President Trump has announced his intention to reduce the U.S. federal corporate tax rate to 15 percent. If this tax cut passes Congress, it would likely signal the end of Pillar 1 of the OECD Project (which aims to reallocate taxing rights to market jurisdictions) and cast doubt on the future of Pillar 2 (the 15% global minimum tax). A renewed push for lower corporate taxes could reignite global tax competition, challenging the stability of the minimum tax framework. Despite these developments, it is more realistic to expect that the global minimum tax will at least continue as a European project. Political and financial constraints make it unlikely that the EU will abandon Pillar 2, and European countries are likely to exert significant pressure on Switzerland to maintain its participation. Swiss cantons should prepare for this scenario by advancing plans to introduce new, internationally accepted tax incentives, such as so-called Qualified Refundable Tax Credits (QRTCs). Given these shifts, global competition for business-friendly tax policies is expected to intensify in the coming years.