The corporate tax rate and the rate for high income earners has fallen in Switzerland over the last year, according to findings by KPMG.

The tax rates of 18 cantons are under the target minimum corporate tax rate of 15%, as stated in the global corporate tax deal agreed by over 130 countries in 2021.

Last year, there was a marginal decline in the average corporate tax rate in Switzerland from 14.9% to 14.7%. This is predominantly due to tax reductions in three cantons, namely Valais (-1.6 percentage points), Aargau (-1.1 percentage points), and Jura (-1.0 percentage points). The lowest corporate tax rate of 11.9% is in Zug, followed by Nidwalden (12%) and Lucerne (12.2%). Bern has the highest corporate tax rate of 21%, says a Swiss info report.

Should Switzerland not raise the corporate tax rate to the 15% threshold, the shortfall may be taxed in another country. According to KPMG estimates, the country may lose around CHF1 billion ($1 billion) to CHF2.5 billion in tax revenue.

The Organization for Economic Cooperation and Development has stated that the initial elements of the global tax deal should come into effect around the world on 1st January 2023. Switzerland is set to launch a temporary ordinance to begin rolling out the deal after a vote on a constitutional amendment in June next year.

The deal is set to have considerable repercussions for low tax countries like Switzerland, as well as offshore markets.

“The burden now falls on countries like Switzerland to take targeted steps to cultivate their other location factors, such as access to specialists and flexible labour market conditions,” according to Stefan Kuhn, Head of Tax and Legal at KPMG.
“It's early days for that, but our expectation is that the [lending] market is probably going to grow anywhere between 5% and 7% this year.”