June 2022 / Switzerland

June 23 2022

Switzerland Declares That Majority of Revenue from OECD Minimum Tax Will Go To Cantons

The Ministry of Finance has indicated that 75% of the additional revenue raised from the imposition of the OECD/G20 minimum 15% tax (Pillar 2) will go to the cantons, and 25% will go to the Confederation (i.e. federal government).

The Confederation will use funds to cover the additional national fiscal equalization (NFE) expenditure and to promote the attractiveness of Switzerland as a business location. For the Confederation, the proposal is budget neutral.

The cantons will receive the major part of the receipts as the companies located there are the entities actually affected by the minimum tax. These additional funds should help the cantons safeguard their appeal as business location. The cantons are free to decide how to use the revenue, but they must appropriately take (the impact on) the communes (municipalities) into account.

A constitutional amendment is required to empower the Confederation to implement the OECD/G20 minimum tax. In order to ensure that the minimum tax is introduced as from 2024, the Federal Council will draw up a temporary ordinance. This ordinance will be replaced by a federal law at a later stage.

For the full text of the announcement by the Ministry of Finance of 23 June 2022, see here (in English), here (in French), here (in German) and here (in Italian).

Note: The OECD/G20 minimum tax will be imposed on large corporate groups with worldwide turnover of at least EUR 750 million that are below the minimum taxation of 15%.

June 21 2022

Companies are actively harnessing the AI ecosystem of the Greater Zurich Area

The first Swiss AI Report is addressing the hype around artificial intelligence (AI) and helping companies to orient themselves in the complex area of innovation. For this, Mindfire, a foundation specializing in AI, has joined forces with the think tank W.I.R.E. to assess the AI activities of 92 Swiss companies from a variety of sectors. This involved startups, SMEs, and even IT giants such as Google. In actual fact, AI is already firmly integrated into the day-to-day business of many companies. Stefan Pabst of W.I.R.E states: “Those who take the matter seriously prioritize it and want to thoroughly understand it to be able to fully exploit its potential.” According to Daniela Suter from Mindfire, this is supported by the fact that 80 percent of participating companies have an AI strategy. She comments: “It is important and proper for the subject to be dealt with at a management level.” Furthermore, 71 percent collaborate with research institutes on AI queries. As a world-leading research location, Switzerland provides the ideal conditions for this.

Greater Zurich Area is an AI hotspot

For example, dynamic AI clusters with global reputations have developed around the Swiss AI Lab IDSIA in Lugano and the Swiss Federal Institute of Technology in Zurich (ETH). The ETH AI Center focuses specifically on sustainability and ethics in the area of AI. According to Daniela Suter, these are aspects where companies could be more strongly positioned in future.

Two of the three AI application examples from the study come from the Greater Zurich Area: the autonomous onboarding solution from the fintech company ti&m from Zurich and the analytical instrument for customer feedback from the Zurich-based startup Caplena for the Swiss retailer Coop. Out of 32 case studies, these were selected by a jury including big names from research such as Thierry Bücheler, the AI strategist at the large IT company Oracle.

Companies optimize their processes with AI

All submitted case studies are exclusively available to the participating companies and aim to promote further exchange within the network. According to Daniela Suter, this is because everyone could learn from each other when it comes to AI questions. Even at this early stage of the technology, there are many parallels. A significant share of the companies use the new technology to optimize processes. As AI recognizes patterns in data sets and learns from them, errors can be minimized and process automation levels can be increased as well. Stefan Pabst states that pragmatism is precisely the right approach. He adds: “The greatest challenges are that sometimes digitization has not yet been completed and data sets are very different. It is best to start with a single corporate sector and create a good basis there.”

Investment in specialists and expertise

Investments are also showing that companies are reading the signs of the times correctly. A third have a dedicated AI budget and another third want to increase AI expenditure by more than 100 percent over the current year. Among other uses, the funds are spent on training existing employees: almost half of the companies invest in AI training. Stefan Pabst views this as one of the most important success factors for AI projects, bringing as many participants as possible along on the journey toward a data-based business.

However, companies are also investing in new specialists. In this regard, the Greater Zurich Area is considered a mecca for recruitment. Rasmus Dahl, Zurich boss of the technology company Meta, confirmed this in a recent interview. According to Dahl, the skills shortage in Switzerland for his highly specialized field is the lowest in the world. He adds: “The skilled workers that we have access to here are world-class.” Meta plans to grow from 200 to 350 employees in Zurich over the next year.

By Yvonne von Hunnius

Full Swiss AI Report 2022

Source: S-GE

June 22 2022

Federal Council Proposes Increases in Deductibility of Interest and Insurance Premiums

The Federal Council has proposed to increase the federal deductions for (i) interest received from savings accounts; and (ii) insurance premiums paid for life, sickness and private accident insurance (see Note). The decision to propose these increases was taken during its meeting of 22 June 2022.

The deductions will be increased as follows:

  • from CHF 1,700 to CHF 3,000 for single taxpayers;
  • from CHF 3,500 to CHF 6,000 for married couples; and
  • from CHF 700 to CHF 1,200 for children and persons that need support.

For the full text of the announcement of 22 June 2022, see here (in French), here (in German) and here (in Italian).

Note: The Federal Council is the executive branch of the federal government of Switzerland.