The case

International community renews commitment to address tax challenges from digitalisation of the economy; for more see link.

The aim is ensure that digitally-intensive or consumer-facing Multinational Enterprises (MNEs) pay taxes where they conduct sustained and significant business, even when they do not have a physical presence, as is currently required under existing tax rules (Pillar One). Pillar Two of the project would introduce a global minimum tax that would help countries around the world address remaining issues linked to base erosion and profit shifting by MNEs.

Source: Lukas von Orelli, President of SwissFoundations, (today’s NZZ, page 18) – literally translated

The commentary

According to a statement released yesterday the OECD/G20 community has made substantial progress towards reaching a consensus-based long-term solution to the tax challenges arising from the digitalisation of the economy, and agreed to keep working towards an agreement by mid-2021. What does this mean for Switzerland? As the details still need to be worked out, it is unclear what the impact of the new proposed rules will be. However, it is expected that export oriented economies like Switzerland will suffer a loss in income tax revenues (Source: SIF). The US government recently suspended tax negotiations with European countries and warned that it would retaliate if it pushed ahead with its plans to introduce new taxes for American technology companies like Amazon, Facebook and Google (Source: NY Times).

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