Two high-profile European Union (EU) decisions are in limbo due to opposition from Hungary and Poland. The two governments have respectively prevented the bloc from sanctioning Russian oil or agreeing to a corporate tax of at least 15%.
On Tuesday, Polish objections to a tax floor for large multinationals again prevented EU finance ministers from signing the deal, risking potential ripple effects by delaying the international implementation of a global agreement, while Hungary ruled out the use of a meeting of national leaders. next week to break the deadlock over sanctioning Russian oil.
Hungary and Poland are both in conflict with the rest of the EU over democratic backsliding, which has delayed the release of EU funds by the European Commission due to state-related issues. by right.
This has led to suspicions that Warsaw and Budapest are using their veto power as leverage to pressure Brussels to release the money.
After a meeting of finance ministers failed to break the deadlock on corporate taxation on Tuesday, French Economy Minister Bruno Le Maire insisted it would be possible to reach a an agreement on the digital tax before the country hands over the rotating EU presidency to the Czech Republic at the end of June.
He said he was “convinced” that “we will have an agreement with Hungary and Poland” by the time finance ministers meet again on June 17.
“We are heading towards a consensus on the minimum level of corporate taxation,” said Mr. Le Maire. “It’s a matter of justice. If we want to fight aggressive tax planning and tax evasion, we need this. . . It is in all of our interests to avoid these practices which destabilize Europe.
Supporters of the Organization for Economic Co-operation and Development (OECD) deal hoped a quick deal in the EU would build momentum to help it pass through the US Congress ahead of the midterm elections in November, when tax-skeptical Republicans could take control. .
Warsaw has said it wants approval of the 15% minimum to be legally linked to a separate agreement on the taxation of the world’s largest multinational corporations, a request for something EU officials have said n is not possible.
The talks with Poland came following a ruling by the European Court of Justice which found that the government in Warsaw had undermined the independence of its judiciary, leading the committee to put pressure on Poland to rectify the situation before funds can be released.
Meanwhile, Hungarian Prime Minister Viktor Orbán, who on Tuesday granted his government extraordinary powers by declaring a state of emergency over the war in Ukraine, reportedly refused to discuss Russian oil sanctions during a an upcoming meeting of EU national leaders.
It had been hoped that the leaders would be able to reach an agreement on the EU’s sixth sanctions package against Russia at a European Council meeting next week, allowing the bloc to jointly agree to phase out the imports of Russian oil three weeks after its first proposed by the European Commission.
Hungary was offered a one-year phase and help to adapt its energy system but maintained its opposition, objecting that the economic cost for its citizens would be too high.
Earlier this month, the Conference on the Future of Europe, a year-long initiative to consult citizens on possible EU reform, recommended scrapping the requirement for unanimous agreement of the 27 Member States for certain decisions.
A spokeswoman for the European Commission said the executive would support the proposal. “Indeed, it would be useful to look at areas where it would be good to move to supermajority voting,” deputy chief spokeswoman Dana Spinant said.