[World Tax News] Switzerland to Implement Iir From 2025 | No UTPR for the Time Being and More

Editorial Team – [2024] 166 taxmann.com 154 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week.

1. Switzerland to implement IIR from 2025; No UTPR for the time being

In 2023, the people and the cantons voted in favour of the Federal Council introducing the OECD/G20 minimum tax rate in Switzerland. The main aim is to prevent Switzerland from foregoing tax receipts in favour of foreign countries. The Swiss supplementary tax (QDMTT), which the Federal Council introduced in 2024, serves this purpose.

During its meeting on 4 September 2024, the Federal Council decided to bring the income inclusion rule (IIR) into force with effect from 1 January 2025. This international supplementary tax will complement the Swiss supplementary tax (QDMTT) already introduced in 2024. With this international supplementary tax, the profits of foreign subsidiaries of Swiss corporate groups, as well as those of intermediate holding companies of foreign corporate groups, are taxed at 15%, provided the corporate group’s global annual turnover is at least EUR 750 million.

By implementing the IIR, Switzerland can secure receipts that can then be used to strengthen the country’s attractiveness as a business location. However, the Federal Council has decided to refrain from implementing the UTPR for the time being, as it believes that the risks associated with such a move would outweigh the revenue potential of a UTPR.

Source: Press Release by the Federal Council

2. Taiwan announces increased AMT for MNE groups subject to Pillar 2 global minimum tax

Taiwan’s Ministry of Finance has proposed draft revisions to the income basic tax rate, also known as the alternative minimum tax (AMT), in response to the Pillar 2 global minimum tax. Beginning in 2025, the AMT rate for Taiwanese enterprises that are part of multinational enterprise (MNE) groups subject to Pillar 2 rules is set to increase from 12% to 15%. These rules apply to groups with consolidated annual revenues exceeding EUR 750 million in any two of the previous four years.

Taiwanese companies that are not part of such MNE groups will continue to be subject to the 12% AMT rate. The increase aims to mitigate the risk of these enterprises having to pay supplementary global minimum taxes in other countries.

Source: Announcement by Ministry of Finance

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