Minister of Finance Mihály Varga held talks with leaders of large Hungarian companies on the transposition of the EU directive on the global minimum corporate tax, the Ministry of Finance announced. At the meeting, Mihály Varga stressed that the government’s goal is to maintain the competitiveness of the Hungarian tax system despite the global minimum tax, and to ensure that Hungarian companies continue to pay one of the lowest tax rates in Europe.
The Organization for Economic Co-operation and Development (OECD) put the introduction of a global minimum corporate tax on the agenda in 2019, and the European Union has also adopted a directive on the subject that Hungary must transpose into its legal system by January 1, 2024, Mihály Varga said. He added that as Hungary has one of the lowest corporate tax rates in Europe, the regulation would have meant a tax increase in Hungary, therefore Hungarian interests were pursued throughout the negotiations.
The minister stressed that Hungary was the most active country in the region in refining the rules, and as a result, it was possible to benefit from reduced rates for investments and to take into account the wide range of taxes paid in Hungary. In transposing the directive, the government is pursuing a twofold objective:
On the one hand, if there is an additional tax liability, it should be attributed entirely to Hungary, and on the other hand, the administrative burden on businesses should be kept to a minimum,
He stressed that the government will also design the global minimum tax regime in such a way that Hungary will continue to provide an attractive investment environment for businesses, and that income generated in Hungary will be taxed exclusively in Hungary.
A global minimum tax liability arises when the effective income tax rate of a multinational corporation in a state is below 15 percent. Groups of companies are affected if their consolidated income exceeds EUR 750 million in at least two of the previous four years. The Ministry of Finance will submit the detailed rules for transposing the EU directive on the global minimum tax, taking into account the proposals of the companies concerned, to parliament at the same time as the autumn tax laws, the ministry concluded.
Via MTI, Featured image: Pixabay