France ready to bypass Hungary for a global agreement on corporate taxation

0

France wants the EU to consider bypassing Hungary in its effort to secure a minimum corporate tax rate for large companies after Budapest blocked the deal, Finance Minister Bruno Le Maire said on Thursday.

The Mayor told reporters in Paris that France would work on “alternative solutions” with Paolo Gentiloni, European Commissioner for the Economy, to approve the agreement negotiated last year by 137 countries at the OECD so that other EU members can implement the minimum tax without Hungary.

His words underscore frustration in Paris over the failure to come up with legislation implementing the OECD’s so-called pillar two, which dictates a minimum effective corporate tax rate of 15%. Ministers were close to striking a deal this month after Poland dropped its opposition, but Hungary suddenly reversed its position and blocked the measure at the last minute.

“Europe can no longer be held hostage by the ill will of some of its members,” said Le Maire, adding that France had fought for the international tax agreement for the past five years and will not do so. wouldn’t give up. “This global minimum tax will be implemented in the coming months with or without Hungary’s agreement.”

Tax measures at EU level are subject to unanimous decision-making, but nine or more member states can go ahead with initiatives via “enhanced cooperation” if not all capitals can be involved. The EU has tried in the past to use enhanced cooperation to implement a tax on financial transactions, but this effort has failed.

The idea of ​​deploying enhanced cooperation to implement the corporate tax rate is seen in Brussels as a last resort and the focus remains on Hungary’s turnaround. “That’s exactly what we’re focused on right now: getting a unanimous agreement,” said commission spokesman Daniel Ferrie.

Some officials still expect Hungary to move closer to the minimum rate, as countries enforcing the measure can impose additional fees on businesses that benefit from a lower rate.

The Mayor said on Thursday that the EU should adopt majority voting for tax matters in the future.

The OECD tax package also includes a first pillar that obliges large multinationals to declare their profits and pay more taxes in the countries where they operate, rather than diverting their income to jurisdictions with low tax rates. ‘taxation. The proposals are also facing headwinds in the United States.

Under Donald Trump, the United States was unenthusiastic and resisted Le Maire’s attempts to promote him, while the Biden administration struggles to persuade Congress to approve the tax provisions for the implementation of the two pillars of the agreement.

France has made approving the tax deal one of the main objectives of its six-month EU presidency, which ends on Thursday.

Hungary’s blocking decision is not seen in Paris as having anything to do with actual tax arrangements, but as a bargaining chip for other disputes between Brussels and Budapest. The Mayor said Hungary’s objections had “nothing to do with the minimum corporate tax”.

Share.

Comments are closed.