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Another Global Minimum Tax Hurdle for the EU

22nd June 2022

TP in 5 social image EU tax hurdles

Introducing new tax laws in the EU requires the unanimous backing of all members states—and in terms of the OECD’s’ global minimum tax proposal, a few have been playing hard to get. For months, Poland has expressed concerns that Pillar Two’s implementation was happening too quickly, and that it should be rolled out in conjunction with Pillar One, a proposal that allows jurisdictions to reallocate a portion of residual profits to where customers—as opposed to headquarters—are located. But now that it has the guarantee that Pillar One and Pillar Two will be linked, Poland has indicated that it will approve the EU global minimum tax. So, problem solved, right?  

Not quite. While Poland seems ready to compromise, now Hungary appears to have had a change of heart. Last week, at a meeting of EU finance ministers in Luxembourg, Hungary’s finance minister said that given inflation and the war in the Ukraine, EU citizens and businesses need to be supported. At this time, the feel is the global minimum tax could harm European economies, so Hungary can’t back it “at this stage.” Another issue for Hungary is that Pillar One wouldn’t be enacted until 2024. And the country’s position is, what’s the rush? After all, neither the U.S. nor Asian countries have adopted Pillar Two yet. 

France, of course, has been an advocate for the global minimum tax since the get-go, and Finance Minister Bruno Le Maire said he’s determined to get the EU in agreement on the minimum tax before France steps down from the (rotating) presidency of the EU Council. It’s an ambitious goal, as the clock is ticking—France’s term is up at the end of the June.