Washington is currently imposing a 39% tarrif rate on many swiss exports. As a possible countermeasure, there is discussion about suspending the OECD/G20 minimum tax in order to ease the tax burden on affected companies. The timing may seem favorable, as the framework is under international pressure: four years ago, more than 130 countries signed a declaration of intent, but to date only around 60 have implemented parts of it—mainly European states and other industrialized nations. Countries such as the United States, China, and India have, so far, not joined in.
Against this backdrop, it is worth taking a closer look at the key elements of the minimum tax, the points of dispute, and the possible consequences for Switzerland.
An overview of the most important questions and answers:
1. What are the key elements of the minimum tax?
The minimum tax applies to multinational corporations with annual global revenues of at least 750 million euros. It is intended to ensure a minimum taxation of 15% in every country. Three instruments are available for this purpose:
- A domestic top-up tax ensures that profits in a company’s home country are taxed at a minimum of 15%. In Switzerland, this rule has been in effect since the beginning of 2024.
- If a country does not levy its own top-up tax, the home country of the parent company can ensure minimum taxation of the subsidiaries’ profits through an international top-up tax—technically referred to as the IIR (“Income Inclusion Rule”). In Switzerland, the IIR has been in effect since the beginning of 2025.
- If neither a domestic top-up tax nor an IIR is applied, another international top-up tax—the UTPR (“Undertaxed Profits Rule”) — allows third countries to enforce minimum taxation. This is done by taxing group entities located in their jurisdiction for undertaxed profits earned in other countries. Switzerland has not yet introduced the UTPR.
2. Which element is particularly controversial?
The UTPR has drawn the most criticism. It allows third countries to tax profits that were not generated within their borders. The Trump administration has described this as an “extraterritorial taxation” of American corporations—a not entirely unfounded objection.
Example: A U.S. parent company operates subsidiaries in India and Germany. While the U.S. and India have not implemented the minimum tax, Germany has introduced all three instruments. Germany can now apply the UTPR to the German subsidiary and capture all “undertaxed” profits of the group—including those of the U.S. parent company and the Indian subsidiary.
This is not only difficult to grasp for non-experts but also legally controversial. So why was the UTPR introduced at all? It serves the goal of the minimum tax: to set limits on international tax competition. The more countries apply the UTPR, the greater the pressure on other states to tax the profits of affected corporations at 15% themselves.
3. What has changed recently?
In June 2025, the United States secured significant exemptions for U.S. corporations. A G7 agreement stipulates that U.S. companies should be excluded from the scope of the international top-up taxes IIR and UTPR. This moves the U.S. closer to its goal of having its tax system recognized in the future as equivalent to the minimum tax under a “coexistence” framework. Washington argues that the U.S. tax system is equally capable of curbing tax competition. This would mean that U.S. corporations would only have to comply with U.S. tax rules. Other countries would then not be allowed to additionally impose the minimum tax, even if U.S. rules are less stringent than the OECD minimum standard.
There are two key differences between the systems: Unlike the IIR, the relevant U.S. taxes (e.g., the tax on foreign earnings of U.S. corporations) apply a worldwide approach. This means that the minimum tax rate for U.S. corporations would no longer be calculated on a country-by-country basis but globally, with certain limitations. In addition, the tax rate is often below the 15% minimum tax.
4. What are the implications for Switzerland?
Since the G7 agreement, it has become unlikely that the minimum tax in its current form will become the global standard. How things will proceed, however, is difficult to predict. It is now up to the OECD to decide if and to what extent the G7 agreement will be incorporated into the minimum tax framework.
Various developments are possible:
- In the best-case scenario, the G7 agreement marks the beginning of the end for the minimum tax. This would benefit Switzerland’s attractiveness as a business location.
- Other countries might be tempted to extend the privileges granted to U.S. corporations to their own corporate groups. For Switzerland, this would reduce the pressure to strictly comply with the minimum tax: many of the affected companies, which tend to pay low taxes domestically, still pay “sufficient” taxes globally. In such cases, depending on the rules abroad, any “undertaxation” in Switzerland could potentially be offset by higher taxation in other countries (see Question 3).
- The tax credits accepted under the original framework could be adjusted. For example, the U.S. is advocating that certain forms of non-refundable tax credits, such as the commonly used R&D super deduction in Switzerland, be recognized in the future. This would give the cantons greater flexibility, which would be positive for Switzerland.
- A negative development is also possible: in the worst-case scenario, U.S. corporations could be systematically advantaged, while the EU and G7 continue to insist on compliance with the minimum tax for other countries. Currently, there are efforts within the OECD to clearly distinguish the minimum tax from the U.S. system. This is intended to keep the minimum tax unchanged—except in cases affecting U.S. corporations.
5. Should Switzerland suspend the minimum tax now?
Although the Federal Council could unilaterally repeal the minimum tax instruments already introduced—the domestic top-up tax and the IIR—such a step would be risky for several reasons:
- No real tax advantage for companies: As long as key trading partners of Switzerland—such as the EU, the United Kingdom, Japan, and South Korea—continue to implement the IIR and UTPR, suspending the minimum tax would hardly strengthen Switzerland’s attractiveness as a business location. A large portion of the profits considered “undertaxed” in Switzerland would ultimately be subject to the IIR or UTPR in these countries. The vast majority of affected companies operate in at least one UTPR country and thus cannot escape the minimum tax regime. At the same time, repealing the domestic top-up tax or IIR would cause Switzerland to lose tax revenue to other countries.
- More bureaucracy: Without the Swiss top-up tax and IIR, companies operating in Switzerland would be subject to additional tax procedures abroad. The UTPR in particular is considered especially complex and administratively burdensome.
- Legal uncertainty: While the G7 agreement increases the likelihood that the model rules will be adjusted in Switzerland’s favor, nothing is set in stone. There is still the possibility that instruments such as the domestic top-up tax and the IIR will remain in place and only be adjusted in line with the G7 agreement (see Answers 3 and 4). In such a case, an early suspension of the minimum tax would primarily undermine the legal certainty and predictability for companies operating in Switzerland.
The international dynamics present both opportunities and risks. Once the definitive positions of key trading partners become clear, Switzerland would be wise to review its implementation of the minimum tax in the interest of its competitiveness.
6. Is the OECD minimum tax issue relevant for negotiations with the United States?
Most likely t likely not. While the Trump administration repeatedly threatened countries with punitive measures such as the “Revenge Tax” should they impose the IIR and UTPR to U.S. corporations, these threats were withdrawn for all countries under the G7 agreement. The U.S. scored a major win: a G7 concession, likely paving the way for adjustments to the OECD model rules. Other countries, including Switzerland, will have to adopt these changes. For that reason, it seems unlikely the U.S. would push for further, tailor-made adjustments to the minimum tax in further tariff negotiations with Switzerland — though of course, absolute certainty is never guaranteed.
