Tax incentives under Pillar 2: New opportunities through Qualified Tax Incentives?

Publication

01-07-2026

2 minutes read

In a recent article published in the Swiss tax journal zsis), we examine whether the OECD's new "Qualified Tax Incentives" regime opens up new opportunities for tax-based business location incentives under Pillar 2 and what this means for Switzerland.

The OECD/G20 global minimum tax (Pillar 2) fundamentally changes the effectiveness of tax-based business location incentives. Tax incentives that reduce taxable income or the effective tax burden may lose all or part of their effect for MNE groups within the scope of Pillar 2.

The Administrative Guidance issued by the OECD Inclusive Framework in January 2026 introduces the "Substance-based Tax Incentive Safe Harbour" and creates a new, albeit limited, degree of flexibility. Under this framework, certain substance-based tax incentives may qualify as "Qualified Tax Incentives" (QTIs) and increase adjusted covered taxes up to the amount of a substance cap. As a result, the economic benefit of such incentives can be preserved under Pillar 2.

The treatment as a QTI is more advantageous than the existing concepts of "Qualified Refundable Tax Credits" (QRTCs) and "Marketable Transferable Tax Credits" (MTTCs), because it increases adjusted covered taxes without increasing GloBE income. However, the benefit is limited by a "Substance Cap" and therefore requires sufficient substance in the relevant jurisdiction, notably in the form of payroll expenses or tangible assets.

The picture is more mixed when looking at the tax incentives currently provided under Swiss tax law. In our article, we conclude that the Swiss R&D super deduction should generally qualify as an expenditure-based QTI to the extent that the deduction exceeds actual expenses and the relevant requirements are met. The Swiss patent box, by contrast, is unlikely to qualify because it is income-based. We further analyse recently introduced cantonal incentive measures in Zug, Basel-Stadt and Lucerne and assess whether they may fall within the scope of the new QTI framework.

While the practical scope of QTIs remains subject to important limitations, the new framework creates additional opportunities for policymakers and businesses to rethink tax incentives in a Pillar 2 environment. Although QTIs are unlikely to fully replace traditional tax incentives affected by Pillar 2, they represent a new OECD-recognised mechanisms capable of preserving the economic benefit of certain tax incentives under the global minimum tax rules. For Switzerland, this raises important questions regarding the future design of tax and non-tax location incentives and may open the door to new approaches to promoting investment and innovation.

The full article, available in both German and English, can be accessed here.