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Will Poland Finally Agree to a Global Minimum Tax?

14th June 2022

TP in 5 social image Poland

Implementing a global minimum tax comes with its fair share of challenges, but for the EU, the biggest is undoubtedly Poland. At least for now. The OECD’s global tax reform consists of two pillars: Pillar One would affect roughly 100 companies and reallocate profits based on where customers—not company headquarters—are located. Pillar Two, on the other hand, is a global minimum tax of 15%. The proposal would allow countries to issue a top-up tax to taxpayers who are headquartered in other jurisdictions and haven’t paid the 15% minimum elsewhere. The two were supposed to roll out together, but rules surrounding Pillar One are taking more time to negotiate, and while Pillar Two was gaining steam, now the original 2023 implementation deadline looks unrealistic. 

To make the minimum tax a directive, the EU needs the unanimous vote of all 27 member states—and so far, it has the support of 26. Stubborn Poland is the only country opposing the measure.  The reason? Poland officials have been adamant that Pillar One and Pillar Two be implemented together. Without that guarantee, the country said it could not vote in favor of the global minimum tax.  

But we hear Poland may be softening on the minimum tax deal. According to Law360, officials from other EU countries seem to think that Poland will reverse its decision on Pillar Two—possibly on June 17 at the bloc’s meeting of financial ministers. Why the change of heart? Some think it’s because Brussels approved $37.9 billion (€35.4 billion) in coronavirus recovery funds—a claim that Polish officials deny.