The main EU economies are willing to circumvent Viktor Orbán’s blockade and put in place the minimum tax of 15% for large companies. This has been declared by Spain, Germany, France, Italy and the Netherlands this Friday within the framework of the meeting of EU finance ministers that is being held in Prague.
In a joint appearance in Prague, Vice President Nadia Calviño stated: “The commitments of the G20 and the OECD must be incorporated into the European legal system. We have to move forward. Right now we need to make sure that there is no competition to the bottom and that big business contributes to the costs of the war.”
The five countries want the global minimum effective taxation to be applied in 2023, which only depends on Hungary. “As inflation hits hard the purchasing power of our fellow citizens, companies must pay their fair share of the burden to alleviate the impact of the global energy crisis”, say the five heads of finance from Germany, Spain , France, Italy and the Netherlands: “This is why we reaffirm today our strengthened commitment to rapidly implement the global effective minimum corporate tax. It is a key lever for greater tax justice through a more efficient fight against optimization and tax evasion.”
The ministers recall that at the June 2022 Ecofin, 26 of the 27 EU Member States “expressed their willingness to implement this important step towards tax justice, and our first objective remains to achieve consensus. If unanimity is not reached in the coming weeks, our governments are fully determined to honor our commitment. We are prepared to implement the global minimum effective taxation in 2023 and by any legal means possible. We are also fully committed to completing the work on the best reallocation of tax rights of the profits of large global multinationals with the aim of signing a multilateral convention by mid-2023.”
The statement is signed by Christian Lindner, German Finance Minister; Nadia Calviño, Vice President and Minister of Economy of Spain; Bruno Le Maire, Minister of the Economy of France; Daniele Franco, Minister of the Economy of Italy; and Sigrid Kaag, Minister of Finance of the Netherlands.
As the five ministers recall, June was the month in which the EU planned to approve the 15% tax on multinationals. But not. At the preceding Ecofin meeting, the finance ministers confirmed the Polish veto, which actually depended on the European Commission unlocking its recovery fund –36 billion euros–, which it ended up doing on the condition that Poland address the political decolonization of the judicial system.
Poland achieved this release and then lifted the veto on the new taxation. But, now, the veto comes from its old ally, Hungary, which also has its recovery plan blocked due to its authoritarian drift, which has even led the European Commission to activate the conditionality mechanism due to the corruption detected in the management of the European funds.
Orbán’s veto of the tax goes hand in hand with Budapest’s tensions with the 26 over the sanctions on Russia.
“Hungary cannot support the proposal for a directive for a global minimum rate at the moment, the work is not ready, I think we have to continue efforts to find a solution,” Hungarian Economy Minister Mihály Varga told Ecofin. .
Thus, Orbán finally fulfilled his threat to veto a minimum tax of 15% on multinational companies in line with the agreement reached at the international level in the OECD last summer.
The OECD proposal last October consisted of two pillars.
The first pillar establishes that 25% of the profits of companies with a turnover of more than 20,000 million dollars (about 19,000 million euros) and a profitability of more than 10% would have to pay taxes in the countries in which they have their business. exercise. According to the OECD, pillar one would affect nearly the 100 largest multinationals –Google, Facebook, technology, etc– and would generate some 125,000 million dollars (119,000 million euros) in annual income to the affected countries and territories.
The second pillar, which was being debated this Friday at Ecofin, introduces a global minimum rate of 15%, which would apply to companies with revenues of more than 750 million euros. The EU Fiscal Observatory calculated that the EU countries could enter some 80,000 million euros per year with the reform.