Switzerland’s withholding tax (WHT) regime on bond interest payments poses a significant challenge to its competitiveness on the international capital markets. While the country offers economic stability, strong financial institutions and favourable corporate tax rates, the 35% WHT levied on bond interest payments discourages foreign investment and limits the attractiveness of Swiss-issued bonds. This article critically examines the Swiss WHT system's impact on resident and non-resident investors, comparing Switzerland's framework with jurisdictions such as Liechtenstein and Luxembourg, which have successfully fostered bond issuance by eliminating such taxes. The analysis explores the Swiss tax authorities’ administrative practice on foreign-issued bonds guaranteed by Swiss companies and evaluates simplifications introduced in 2017 and 2019 to mitigate adverse tax consequences. The article concludes that abolishing Swiss WHT on bond interest payments would enhance Switzerland’s status as a financial hub, facilitating capital inflows and economic growth. Given global tax developments, including the OECD's 15% global minimum tax, Swiss policymakers may soon face renewed pressure to reform the WHT to maintain the competitiveness of the country’s financial sector.