According to the economic news portal Világgazdaság, the EU is set to revisit its plans to introduce the US initiated global minimum tax during a meeting of European Union finance ministers on Tuesday. A deal looks unlikely, and the introduction of the new taxing system will reportedly only be realized next year, instead of December 2022, as originally planned.
At the Organization for Economic Co-operation and Development (OECD), 137 countries have agreed to implement the global minimum tax within their own tax rules by the end of 2022. It is now safe to say that countries will not be able to meet this ambitious deadline, and the most likely scenario, according to a tax expert interviewed by VG, is that implementation slips to 2023. The introduction has stalled due to the previous Polish and now then the Hungarian veto, while the US Senate was unable to approve it either due to the opposition of a single Democratic senator.
Since then, there have been signs that many major countries will introduce the rules in 2023, even against a Hungarian veto if necessary. The official agenda for Tuesday’s ECOFIN meeting of EU finance ministers includes the adoption of a global minimum tax, but the Hungarian position is unlikely to change. In a recent radio interview,
Prime Minister Viktor Orbán said the minimum tax was a job-killing measure and stressed that the tax was a national competence,
reported VG.hu.
According to an expert interviewed by the new portal, it could be against the EU’s founding treaty to introduce a global minimum tax without Hungary. Furthermore the 15% minimum tax could put the continent at a competitive disadvantage. Gergely Czoboly, a tax expert at PwC Hungary, said the most visible consequence is that companies operating in Hungary will be able to enjoy the lowest corporate tax rate in the European Union of 9% for one year longer.
The delay has the effect of reducing the benefits negotiated by Hungary and Poland in the OECD. In the negotiations the two countries insisted that as a compromise, the new tax should be calculated at a higher level for the first ten years. This rate, however, is steadily decreasing year by year.
Had a productive day of meetings at the G20 today. The Global Minimum Tax we discussed today is a game changer for American workers, taxpayers, and businesses. I’m looking forward to day two. pic.twitter.com/XCCjP6kiMM
— President Biden (@POTUS) October 30, 2021
The news portal National Review wrote earlier that “world leaders from the G-7 recently announced their support for the Biden administration’s plan to implement a global minimum corporate tax of at least 15 percent. The plan would effectively eliminate tax competition and create a government taxation cartel — companies could no longer vote with their feet and move to more tax-advantageous countries to grow their businesses. The Biden administration led the charge, and European leaders from high-tax countries with hugely inflated welfare spending embraced the proposal.”
Via VG.hu, Featured Photo: Twitter Potus