The University of St.Gallen study on the OECD global minimum tax for multinational enterprises, commissioned by the Swiss-American Chamber of Commerce (Amcham), attracted considerable attention in May. In the study, Professor Peter Hongler of the Institute of Law and Economics examined Switzerland’s available courses of action and recommended that the country withdraw from the international framework as quickly as possible, as previously reported by finews. The business associations Economiesuisse and Swissholdings immediately rejected the proposal.

The OECD global minimum tax imposes a tax rate of 15 percent on multinational enterprises with annual revenues of at least 750 million euros. Where the country of domicile applies a lower rate, other jurisdictions may levy a top-up tax. However, far from all of the 140 countries that signed the agreement have implemented it. The most prominent absentee is the United States, which also refuses to accept top-up taxation by other jurisdictions.

What should Switzerland do next regarding the global minimum tax? finews met Rahul Sahgal, the CEO who commissioned the study, at Amcham’s offices in Zurich. The opportunity was also used to ask him about the tariff dispute with the United States. From 2021 to 2024, Sahgal served as Deputy Head of the Tax Division at the State Secretariat for International Finance in Bern. Before that, from 2017 to 2021, he was a counsellor responsible for financial and tax affairs at the Swiss Embassy in Washington.

Mr Sahgal, did you deliberately intend the study to be provocative?

No. The aim was to bring previously neglected aspects into the debate. A key point is that this was not a conventional commissioned study in which the desired conclusion had been determined in advance. Professor Hongler first came to my attention when he compiled highly interesting data on US investment in Switzerland in November 2025. In early 2026, he published the study «Preliminary Thoughts on the Implementation of the Side-by-Side System». This concerns the possibility of a jurisdiction being recognised as equivalent to the OECD rules where its tax system pursues similar objectives. The United States made use of this option, substantially reducing the implementation burden. Until two weeks before publication, our study was entitled «Options for Implementing the Side-by-Side System».

Why was the title changed?

Because it became clear that the legal risks associated with Switzerland’s implementation of the global minimum tax are significant and increasing. Moreover, the stated objective of retaining the tax base within the country is increasingly unlikely to be achieved. Switzerland’s attractiveness as a business location is eroding: foreign groups are no longer coming to Switzerland or are even relocating, while Swiss groups are considering allocating profits to more tax-competitive jurisdictions. The study concludes that the sooner Switzerland withdraws, the better it will be for the country.

«The study shows that the sooner Switzerland withdraws, the better it will be for the country.»

Were you surprised by the business associations’ negative responses?

Their position is understandable, as certain associations primarily represent the static perspective of Swiss groups with substantial EU exposure. These companies are also members of our organisation, and their concerns are entirely legitimate. However, the study takes the perspective of Switzerland as a sovereign state. If a court were to uphold a challenge to the implementation of the global minimum tax on the grounds that it violates the principle of legality or double taxation agreements — and according to the study, the likelihood of this is not insignificant — the entire structure would collapse. The federal government and the cantons would then have to refund taxes to companies, while foreign jurisdictions could claim the right to levy top-up tax. Such a scenario closely resembles what occurred in the United States after the Supreme Court ruled that part of the tariffs was unlawful.

Why did you not coordinate with the other associations in order to present a united front?

This is not a straightforward issue. Almost every company has a different structure and therefore faces different pressure points. There are also differing arrangements at cantonal level. One week before publication, we presented the study to the Federal Department of Finance, specifically to the State Secretariat for International Finance and the Federal Tax Administration, and held a constructive discussion. We had also informed other stakeholders in advance that we were working on a study, including many companies.

«Changing the study’s conclusion on the OECD global minimum tax for political reasons was never an option.»

For me, however, this is primarily an academic study, and changing its conclusion for political reasons was therefore never an option. That was the reason for our decision to proceed independently. Nevertheless, there is broad agreement within the business community that Switzerland must pursue a two-track approach. On the one hand, the exit scenario must be examined seriously. On the other, Switzerland must make use of the flexibility available under the current implementation of the minimum-tax framework. The merit of our study is that the first option has now been placed on the table following a rigorous academic analysis.

The study proposes mitigating the top-up-tax risk associated with an exit by introducing a domestic top-up tax, while also warning that this approach would be «challenging». What is the problem?

Such adjustments take time and are complex to implement. This is why various stakeholders oppose an immediate withdrawal: they do not want to be left exposed. However, by no means all of the approximately 200 Swiss groups and 2,000 foreign subsidiaries currently subject to the global minimum tax in Switzerland oppose an immediate exit or would face top-up taxation.

Certain Swiss groups, for example in the commodities sector, do not operate in the EU or in other jurisdictions applying the Undertaxed Profits Rule. Others, such as financial-sector companies in Zurich, already pay more than 15 percent. For both categories, implementation currently creates a substantial administrative burden in terms of compliance and financial reporting, without providing any benefit.

Just over a year ago, you described the global minimum tax as sharmful to Switzerland, but you stopped short of supporting withdrawal because of the threat of top-up taxation by EU member states. Has the study changed your mind?

With the Americans’ side-by-side package, which enables them to fully exploit their tax competitiveness, we have now reached a point where we must ask which option is worse. A number of cantons have increased their corporate tax rate to 15 percent. Companies in those cantons would therefore not face top-up taxation even if Switzerland withdrew. As mentioned, implementation is also relatively burdensome for them. Switzerland’s attractiveness as a business location is suffering. Yes, some companies could be affected by top-up taxation, but that does not alter the fact that, from an overall perspective, an exit could be advantageous. In addition, there are the legal risks identified in the study.

«The proposal on which Swiss voters decided in 2023 must be read carefully.»

The study lists numerous risks associated with the OECD global minimum tax. These include the dynamic reference to an unspecified number of accounting standards and the resulting breach of the principle of legality, the insufficiently substantiated tax base, and the constitutional dimension — namely, the carte blanche granted to the Federal Council to depart from fundamental principles of Swiss tax law. Was all of this not already known at the time of the 2023 referendum, when voters approved the proposal by a clear majority?

The proposal must be read carefully. We did not vote for or against the OECD global minimum tax. We merely granted the Federal Council the authority to introduce it. The constitutional provision states that «the Confederation may issue regulations on taxation in the market jurisdiction or on minimum taxation for large corporate groups»; the OECD is not even mentioned. In addition, the Federal Council is required to take «international standards» into account.

It is entirely legitimate to ask whether minimum taxation still constitutes such an international standard when many major signatory states outside Europe have not implemented it. It is also questionable whether Switzerland’s current implementation genuinely «serves to safeguard the interests of the Swiss economy as a whole». That would in fact be a prerequisite for the Confederation to depart from established principles of tax law in the first place. The Federal Council’s original dispatch to Parliament should also be revisited. In it, the government assured Parliament that the global minimum tax was not intended to serve fiscal objectives. However, as the study shows, Switzerland has also made rule-of-law errors during implementation over the past two years.

«We should not have adopted the OECD’s administrative guidance wholesale, without scrutiny or filtering.»

In what respect?

We should not have adopted the OECD’s administrative guidance wholesale and without scrutiny. Like many other countries, we should instead have incorporated it through our ordinary legislative procedures. One example concerns tax rulings worth CHF 6 billion to CHF 7 billion, which at least had a basis at ordinance level but became invalid overnight as a result of an OECD administrative rule. Even in the case of the Automatic Exchange of Information in the financial sector, which also operates within an OECD framework, Switzerland does not apply this kind of dynamic adoption. Parliament has the final say whenever a new country joins the automatic exchange system.

Read on to find out how Rahul Sahgal believes the tariff dispute with the United States could be defused.