Daily Management Review

EU Cannot Agree On Reforms In Corporate Tax Since Hungary Vetoes Changes


EU Cannot Agree On Reforms In Corporate Tax Since Hungary Vetoes Changes
Hungary's Finance Minister, Mihaly Varga, informed his EU counterparts on Friday that his country could not support corporation tax reform at this time, essentially thwarting an agreement at the EU level.
An EU agreement was expected on Friday after Poland withdrew its opposition to imposing a minimum corporate tax of 15% on large multinational corporations, but Hungary emerged as a last-minute stumbling block, preventing a deal that required the support of all 27 EU nations.
"Hungary cannot support the adoption of the global minimum tax directive at this stage," Varga told finance ministers in a public session of a meeting.
He added: "The work is not ready. I think we have to continue the effort to find a solution."
French Finance Minister Bruno Le Maire, who had made the tax deal a primary priority of France's six-month EU presidency, which ends in two weeks, expressed sadness but urged ministers to keep working to reach an agreement at a later date.
Poland's finance minister, Magdalena Rzeczkowska, formally renounced her objection to the deal at the meeting.
The EU talks were intended to convert into law a global overhaul of corporation taxation agreed upon by roughly 140 countries last October.
Le Maire stated that all technical issues had long been resolved, meaning that the impasse was due to political concerns.
Poland and Hungary have been at odds with the European Commission, which has delayed their receipt of COVID-19 recovery fund funds due to concerns about their attitudes toward the rule of law and other EU norms.
The Commission approved payments to Poland earlier in June, while EU recovery funds for Hungary remain stalled.
The revamp established a global minimum corporate tax of 15% on large multinational corporations and granted other nations a larger portion of the tax take on the earnings of large U.S. digital corporations like as Apple Inc and Alphabet Inc's Google.
The change was supposed to go into force in 2023, but it has now been essentially put back to 2024.
The Biden administration is also failing to get legislation to put the global minimum tax agreement into effect.