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Will the EU Get Poland to Agree to a Global Minimum Tax?

6th April 2022

It’s no secret that the European Union has been trying to pass a directive that would require all member states to agree to a global minimum tax. Pillar Two, as the second part of the OECD’s global tax overhaul is known, is a global minimum tax of 15% and the proposal would allow countries to apply a top-up tax on companies headquartered in their jurisdictions if they have paid less than 15% in other countries. Of course, Pillar Two is just part of the OECD’s global tax plan. Pillar One is the other half and that requires 100 of the world’s largest companies to declare profits and pay tax in the countries where they have customers as opposed to where they have a physical presence, as things stand now. Countries around the world will need to adopt one or both to make them part of domestic law. To make the global minimum tax an EU directive, as the EU wants to do, it requires the unanimous vote of all 27 member states. And while they all showed support for the global minimum tax back in October, some members states have lost some enthusiasm. Estonia, Sweden, Malta, and Poland prevented a unanimous vote a few weeks ago, and this week, at a meeting of EU finance ministers in Luxembourg, Poland singlehandedly stopped the effort once again.  

While many countries have expressed concerns that a 2023 deadline is just too soon to implement a global minimum tax, Poland wants “legally binding” assurances that Pillar One would also come to fruition. The finance minister said that it’s not right to implement a global minimum tax without making sure that digital giants, which Pillar One stands to impact most, are also paying their fair share of tax.  

Poland’s opposition is frustrating to other member states—especially since the Council has added wording to the proposal that Pillar One and Pillar Two will work together. Let’s see if Poland and the rest of the EU can do the same.