New analysis shows Trump's next attack on Switzerland is underway

Low corporate taxes alone are no longer enough: a new analysis shows that Switzerland is becoming less attractive in international tax competition. The USA in particular is increasing the pressure on Switzerland as a business location with a special regulation.

Switzerland has long been considered an attractive location for international companies - primarily due to its low corporate taxes. Cantons such as Zug and Basel in particular attracted numerous companies. However, this advantage is increasingly disappearing.

The financial auditor KPMG points this out in the new "Swiss Tax Report 2026". The reason for this is the international minimum tax and earlier tax reforms in Switzerland. According to KPMG, the cantons are now much less able to distinguish themselves through low profit taxes than they were a few years ago.

"Due to developments in the international corporate tax landscape in recent years, we are observing a creeping erosion of the tax advantage in Switzerland," says Stefan Kuhn, Head of the Tax and Legal Department at KPMG Switzerland.

Many countries are therefore no longer primarily trying to be attractive with low tax rates. Instead, they are increasingly relying on subsidies, tax breaks or state support for companies.

Several Swiss cantons are already responding. According to KPMG, Graubünden, Basel-Stadt, Zug, Lucerne and Schaffhausen are working on new programs to continue attracting companies. Other cantons are also examining additional measures.

USA creates additional pressure

Developments in the USA are currently particularly sensitive for Switzerland. The US government rejects parts of the global OECD minimum tax and has negotiated a special arrangement known as the "side-by-side solution".

Put simply, this means that US companies do not have to comply fully with the new OECD rules. Instead, they may continue to be partially taxed according to the US tax system.

Certain rules of the OECD minimum tax therefore do not apply to US companies. However, other regulations - such as additional local taxes - remain in place. As a result, two different systems will effectively coexist worldwide.

This is problematic for Switzerland. Many large US corporations have branches or subsidiaries in this country. If American companies are in a better tax position than other international companies in future, this could distort competition.

KPMG therefore warns that companies could postpone investments or adapt their structures. This could be detrimental to Switzerland in the long term.

Consequences are difficult to assess

According to KPMG, it is currently difficult to predict the extent to which Switzerland would actually be affected.

Olivier Eichenberger, Director Corporate Tax at KPMG Switzerland, says: "That depends on what is meant by 'participating' in the side-by-side regime."

If Switzerland itself wanted to introduce such a special regime, this would hardly be legally possible at present. According to Eichenberger, this would require major changes to Swiss tax law.

The situation is different with the recognition of the US system. "If, on the other hand, the USA were to be recognized as an SbS regime, as currently envisaged, this would have particular consequences for US groups with activities in Switzerland," says Eichenberger.

This could make Switzerland less attractive compared to locations in the USA. However, it is "currently almost impossible to reliably estimate" the extent of the potential financial consequences.

Switzerland would have to create new advantages

According to KPMG, international tax competition is likely to intensify further in the coming years.

"If the USA is recognized as an SbS regime and Switzerland retains the QDMTT at the same time, international competition between locations is likely to intensify further," says Eichenberger.

Switzerland must therefore find new ways to remain attractive for international companies. Additional economic or tax incentives at cantonal level are conceivable.

"This could include new tax or economic policy incentives at cantonal level, such as targeted funding instruments or other compensatory measures," explains Eichenberger.

According to KPMG, however, a special path for Switzerland would be risky. If Switzerland were to waive certain additional taxes only in relation to the USA, this could violate OECD rules.

"As a result, companies abroad would be taxed additionally via the IIR or UTPR. This would ultimately result in a shift of tax substrate abroad," says Eichenberger.

KPMG is therefore calling for Switzerland to improve its attractiveness through more than just taxes. "In order to remain attractive, Switzerland should increase its attractiveness as a business location in a targeted manner with the available tax measures and also further strengthen the non-tax framework conditions."