Switzerland and the EU enter a new era of corporate taxation
Published: Monday, Jan 1st 2024, 15:50
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In Switzerland and the EU, regulations for the introduction of the international minimum tax for large companies came into force at the turn of the year. According to the EU Commission, the heyday of harmful tax competition is now over.
The new regulations are intended to ensure that multinational companies with an annual turnover of 750 million euros or more pay at least 15% tax, regardless of where they are based. The aim is to prevent harmful tax competition and the shifting of corporate profits to tax havens. According to EU figures, around 140 countries and territories have now signed up to the project.
Switzerland is also joining in. From the 2024 tax year, it will tax large internationally active companies at a rate of at least 15%. The Federal Council implemented the minimum tax agreed by the OECD and the 19 most important industrialized and emerging nations (G20) with an amendment to the ordinance.
A law will be enacted later through the ordinary channels. Around one percent of companies operating in Switzerland will be affected by the minimum tax. The Federal Council estimates that the new OECD minimum tax will raise between one and 2.5 billion Swiss francs. Of this, 75 percent, i.e. around 800 million to 2 billion Swiss francs, will go to the cantons and 25 percent, i.e. around 250 to 650 million Swiss francs, to the federal government.
220 billion dollars in additional revenue
EU Commissioner for Economic Affairs Paolo Gentiloni announced on Monday that the reform has the potential to generate additional tax revenue of 220 billion US dollars per year. This could help countries all over the world to finance essential investments and high-quality public services.
The EU and the USA, together with numerous other countries, agreed on a major international tax reform project in 2021. However, the second part, a new regulation for large digital corporations, is still a long way off. It is intended to regulate at an international level how the taxing rights to the profits of the largest and most profitable multinational companies are distributed between countries.
According to the EU, this could take account of changing business models - for example, the fact that digital groups can operate in a location through online sales, for example, without also having a physical presence there. Under current legislation, hardly any taxes are due in this case.
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