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Switzerland Approves GloBE Rules and Azerbaijan Joins the 2-Pillar Solution

December 16, 2022 saw more developments on the international implementation of Pillar Two. 


The Swiss parliament approved the draft constitutional amendment for enacting the GloBE rules. 

There will be a public referendum on June 18, 2023 and if approved Switzerland will implement the Pillar Two GloBE rules via temporary ordinances of the Federal Council.

Sub-section 9 of the transitional rules for the proposed constitutional amendment requires the Federal Council to provide the Parliament with draft legislation for the implementation of Pillar Two by Federal Act within six years after the introduction of the Pillar Two rules by temporary ordinances.

One of the key revisions is the introduction of Sub-section 3(b) of the transitional rules for the draft constitutional amendment. This provides that the Federal Council may enact supplementary regulations governing the deductibility of Pillar Two top-up tax tax as an expense for income taxes for both federal and cantonal tax purposes. This has been inserted as for corporate income tax purposes, income tax is usually tax deductible in Switzerland. 

If the constitutional amendment is approved in the June 2023 referendum, the Pillar Two GloBE rules will apply from January 1, 2024. It is as yet unclear whether the under-taxed payments rule would be delayed by 1 year as is the case with other jurisdictions (and as proposed by the OECD). The draft constitutional amendment simply states that ‘if it is accepted by the people and the cantons, it will come into force on January 1, 2024’.


In a statement by the OECD on December 16, 2022, it was announced that Azerbaijan has joined the Inclusive Framework on BEPS and will implement the two-pillar solution. They have therefore agreed to implement both Pillar One and Pillar Two. 

For Pillar One, the multilateral convention is expected for mid 2023, however Azerbaijan can now begin the process of drafting legislation to implement the Pillar Two GloBE rules.