SWISS-BASED MULTINATIONALS AND SMEs: NAVIGATING THROUGH KEY UPCOMING POLITICAL CHANGES
The Swiss political system is highly complex, with many forces at play in the decision-making process. This unique political architecture makes it harder to foresee upcoming changes. Now, more than ever, multinationals and SMEs need to closely monitor their political environment to mitigate emerging risks and seize nascent opportunities. We provide a brief analysis of three major upcoming transformations in the regulatory and legislative sphere to help you always be one step ahead.
1. G7 corporate tax plan: what will happen for Swiss based multinationals?
On July 1st, the OECD announced that 130 countries joined the Statement establishing a new framework for international tax reform. One of the goals of this new plan is to establish a global minimum tax rate of at least 15%, which could be implemented as soon as 2023 if the optimistic timeline set by the OECD is respected. What would be the consequences for Swiss-based multinational companies in cantons having a corporate tax rate inferior to 15%? The main decision to monitor closely will be the coordinated reform plan of the Swiss Federal Council, which could be presented in the first quarter of 2022. This plan, which is currently being drafted by the Federal Department of Finance in close consultation with other federal departments, the cantons, and other actors, will most likely put forward a set of compensatory measures for companies. It will be crucial to closely follow these developments.
2. Swiss CO2 Act: what are the next steps now that it has been rejected?
The Swiss population rejected the CO2 act on June 13th, 2021. Just a few months after this result, many companies active in sectors such as transportation, construction or energy are struggling to understand the next steps following the unexpected outcome. For now, the parliament is working on a transitional solution, with the goal of continuing the climate protection instruments that were present in the CO2 Act – expiring soon – until the end of 2024. Nevertheless, things will become more complex in the coming months. For instance, there are discussions regarding a possible parliamentary indirect counter-proposal to the Initiative pour les glaciers, which could also lay a legal framework to reach net zero by 2050. These ongoing debates require the utmost attention of concerned actors to make sure they do not miss anything that could impact their activities.
3. Aftermath of the ‘responsible businesses’ initiative: what are the upcoming reporting obligations for Swiss companies?
In November 2020, Swiss people voted against the responsible business initiative. Despite this, the Federal Council counter-proposal will probably come into effect in 2023, resulting in increased reporting obligations on non-financial topics for Swiss based companies meeting the following criteria: 500 full-time employees or more; a balance sheet of CHF 20 million or more; revenues of CHF 40 million or more. The aim of these reports will be to ensure that their business activities respect human rights and certain environmental standards. Companies subject to these new reporting obligations need to plan to make sure they are ready when this enters into force.
*Image copyright: Marcel Kessler