Hungary blocks EU clearance of minimum corporate tax

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Hungarian Prime Minister Viktor Orban arrives for the European Union leaders summit in Brussels, Belgium May 30, 2022. REUTERS/Johanna Geron/File Photo

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LUXEMBOURG, June 16 (Reuters) – Hungary has emerged as a belated opponent of a global agreement on a minimum corporate tax rate, likely forcing European Union finance ministers to postpone a vote scheduled for Friday on its transposition in EU law, said two European diplomats. Thursday.

A deal was expected on Friday after Poland dropped its opposition, one of the diplomats said, but Hungary emerged as a last-minute hurdle.

A second diplomat said a public debate on the issue was still on the agenda for Friday’s meeting of EU finance ministers, but a deal was now unlikely.

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Poland and Hungary are at odds with the European Commission, which has delayed receiving money from the COVID-19 recovery fund due to questions about their stance on the rule of law and other EU values. EU.

The Commission approved payments to Poland two weeks ago, but subject to Warsaw making reforms to its judicial system. Read more

The EU diplomat said Hungary, for which stimulus fund money has not been approved, emerged on Wednesday as an opponent of the minimum tax deal proposed by the OECD and backed by more than 100 countries.

Hungarian Foreign Minister Peter Szijjarto said on his Facebook page that it was “very dangerous” to increase the tax burden on European manufacturers in times of war in Europe and challenges for the EU economy. .

The success of the Hungarian economy hinges on the government’s ability to cut taxes and a tax hike will threaten jobs, he said.

The European diplomat said that Hungary’s arguments were not convincing because the minimum tax was designed to create a global level playing field, to the benefit of Europe, and that Hungary had also obtained special dispensation, which means the rule would have no negative impact.

“If there is no problem, it is difficult to find a solution,” the diplomat said. “It doesn’t look very promising at the moment.”

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Reporting by Philip Blenkinsop in Brussels and Krisztina Than in Budapest; additional reporting by Francesco Guarascio in Luxembourg Editing by Gareth Jones

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