Updates

The OECD/G20 project on the taxation of the digital economy includes a profit redistribution mechanism (Pillar 1) and the introduction of a 15% global minimum tax for large corporations (Pillar 2). While Pillar 1 remains stalled, Pillar 2 – the global minimum tax – has already been implemented by various countries, including Switzerland. In January 2026, the OECD published the so-called “side-by-side” package, which effectively exempts U.S. companies from the OECD minimum tax by recognizing the U.S. system. Among other things, the package also includes OECD-compliant tax relief on labor costs and investments. SwissHoldings is advocating for Switzerland to take measures as quickly as possible so that it can take advantage of these new opportunities to strengthen its own attractiveness as a business location.

Contents

The OECD project on the taxation of the digital economy aims to improve acceptance of international corporate taxation. The project is being advanced within the framework of the “OECD/G20 Inclusive Framework on BEPS” (hereinafter: IF), which encompasses over 140 countries. It consists of two pillars. Pillar 1 focuses on a greater redistribution of profits from the world’s approximately 200 most successful multinational corporations from their home countries to the countries where they operate. Pillar 2 focuses on the introduction of a minimum corporate tax rate of 15% for all multinational corporations with revenue of at least 750 million euros.

State

The implementation of Pillar 1 has so far not progressed beyond discussions at the OECD level. Pillar 2, the global minimum tax, has been fully or partially implemented by over 60 countries, including the EU and Switzerland. However, the majority of IF member states have still not implemented any of the three minimum tax elements (QDMTT, IIR, and UTPR). These include economic powerhouses such as the U.S., China, and India.

In January 2026, the OECD published the “side-by-side” package, which was approved by all IF member states and will take effect starting with the 2026 fiscal year. This package includes the so-called SbS Safe Harbor, the exemption from the OECD minimum tax required by the U.S. It is possible that in the future, other countries such as Brazil, China, and possibly India will seek to meet the requirements for the SbS Safe Harbor in order to benefit from its advantages. In addition to the SbS Safe Harbor, the package includes further adjustments:

• Ultimate Parent Entity (UPE) Safe Harbor: This provides an exemption from the application of the UTPR in the country of the group’s parent company and could be attractive to large countries (e.g., India) that have not yet introduced the minimum tax and have many corporate groups that are active both domestically and in oth -minimum-tax countries.
• Simplified ETR Safe Harbor: This provides simplifications for calculating the complex minimum tax requirements. The OECD also intends to develop further simplifications.
• Transitional CbCR Safe Harbor: This existing safe harbor, already used by many multinational corporations, provides for simplified calculations and may now be used for an additional year (2027).
• Substance-Based Tax Incentive Safe Harbor: Finally, the SbS package grants countries the option to provide tax deductions that comply with the minimum tax rules. Specifically, companies may fall below the minimum tax threshold by either 5.5% of their total payroll costs in a country or by 5.5% of their depreciation on property, plant, and equipment (or by 1% of their property, plant, and equipment holdings) in a country. These new so-called substance-based tax incentives thus allow companies with substance (personnel, property, plant, and equipment) to receive significant tax relief depending on their situation and to promote the creation and retention of qualified jobs in particular (e.g., in the areas of R&D&I, DEMPE, high-value-added manufacturing, etc.). However, countries must incorporate the new deductions into their domestic law. If this is done, then even a tax rate below 15% does not constitute a violation of the minimum tax.

Finally, the SbS package includes the announcement of a stocktake for the year 2029, the conduct of new peer reviews, and the reaffirmation of the importance of QDMTTs. It is clearly stated that discriminatory and conditional supplementary taxes imposed by other countries do not have to be recognized as so-called “covered taxes.”

Outlook

Over the course of 2026, the IF is expected to adopt further important guidelines:

• Simplifications to the Simplified ETR Safe Harbor.
• Adjustments to the GloBE Information Return (GIR).
• Guidance on Related Benefits: This is intended to establish the rules under which countries may provide subsidies, refundable tax credits (QRTCs), and other benefits to companies, particularly those subject to the minimum tax.
• Rules for dispute resolution.
• Rules for conducting comprehensive peer reviews will be established.

At the same time, various countries are likely to initiate legislative projects to incorporate new provisions of the SbS package into national law, particularly to enhance their attractiveness as business locations by utilizing the new substance-based tax incentives. Switzerland’s competitors, in particular, are working intensively to advance such projects so that they can offer interested international companies attractive investment conditions and legal certainty as quickly as possible.

Position

The OECD minimum tax, combined with the strong Swiss franc, poses enormous challenges for Switzerland as a business location and requires an urgent, targeted refinement of its business location policy. At the same time, the OECD minimum tax is an international reality to which Switzerland must adapt in the long term. A withdrawal by Switzerland is therefore not a viable option. Rather, the federal government and the cantons should leverage the opportunities offered by the SbS package as quickly and effectively as possible to strengthen Switzerland’s competitiveness in the long term.

Switzerland’s goal should be to specifically strengthen and further expand its appeal for research, development, and innovation activities. Particular emphasis should be placed on the country’s appeal for intellectual property (patents, trademark rights, etc.) as well as for high-value-added and thus fiscally lucrative decision-making functions. The goal must be to once again attract more promising business projects back to Switzerland.

Switzerland must take targeted steps to strengthen its competitiveness and ensure attractive tax revenues in the long term by boldly and swiftly pursuing new approaches. In this context, the consistent use of OECD-compliant instruments, such as substance-based tax incentives, is of central importance. Likewise, the Qualified Refundable Tax Credits (QRTCs), which are expressly provided for under the OECD minimum tax and are already being successfully used by other jurisdictions, such as Singapore, should be examined.