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Hungary Abstains from Statement on Global Minimum Corporate Tax Rate

MTI-Hungary Today 2021.07.05.

The introduction of a global minimum corporate tax rate, which the OECD accepted on Friday, could bring a competitive disadvantage for the European Union, a government official said on Monday.

Hungary was among nine countries that did not join a statement backing the introduction of a global minimum corporate tax rate at a meeting of members of the Organisation for Economic Co-operation and Development’s Inclusive Framework on July 1.

At the meeting, 130 members of the framework joined the “Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalization of the Economy”, the finance ministry’s tax affairs state secretary told MTI. The first pillar, which Hungary “fully supported”, would re-allocate some taxing rights over multinationals from their home countries to the markets where they have business activities and earn profits, regardless of whether firms have a physical presence there, Norbert Izer said.

The second pillar would introduce a 15 percent minimum corporate profit tax.

Izer said Hungary was on board with the second pillar of the agreement “as long as it exclusively addresses artificial tax avoidance structures”. “In the case of profits generated from real economic activities … taxation is the sovereign right of every country, and no international organization may intervene,” he said.

Gov't: Global Minimum Corporate Tax Rate Would Be 'Violation of Sovereignty'
Gov't: Global Minimum Corporate Tax Rate Would Be 'Violation of Sovereignty'

"The concept attempts to reverse the progress of those countries that have made serious efforts to introduce lower taxes," State secretary Izer said.Continue reading

Izer said the nine dissenting countries were “really just the tip of the iceberg”. “Rather than speaking about the uniform support of 130 countries, it would be more accurate to say that there were that many that supported the proposal or that were not clearly against it,” he added.

Featured photo illustration by Gergely Botár/MTI/kormany.hu