The OECD's programme of work proposes solutions based on two pillars:
- Pillar 1: Modification of the profit allocation mechanism and the nexus rules for establishing tax liability. In concrete terms, a higher share of consolidated profits should be allocated to market jurisdictions for taxation. Under the new rules, consolidated profits would also be taxed in jurisdictions where the company has no physical market presence, leading to a shift in tax receipts from large groups' states of domicile to market jurisdictions. The OECD's technical working parties are elaborating the details.
- Pillar 2: Minimum taxation rule. In concrete terms, using as yet undefined measures, a minimum tax rate for groups should be ensured. The OECD's technical working parties are elaborating the numerous technical details. No decision will be made on the level of this rate until the technical details have been clarified.
Switzerland is involved in this OECD work. The country prefers long-term, broad-based multilateral solutions rather than a multitude of confusing national measures. It is committed to tax sovereignty and fair tax competition, and considers that a binding minimum tax level generally hampers innovation and growth. Any minimum tax recommendations at international level must be moderate.
