Some of the EU’s largest member states have vowed to implement a planned global corporate minimum tax rate, despite opposition from Hungary, which has refused to support the bloc’s proposals for the levy.
In a joint statement on Friday, the finance ministers of Germany, France, Italy, Spain and the Netherlands pledged to “promptly introduce an effective corporate tax rate of at least 15 percent in their own countries”, adding that they wanted to implement the new regime. . by 2023.
“We are ready to implement the global minimum effective tax by 2023 and by all possible legal means,” they said in a statement released Friday at the meetings of finance ministers in Prague.
The European Commission has proposed an EU directive to implement the minimum rate, which is part of the landmark international OECD corporate tax treaty concluded last year. The deal aims to end the use of tax havens by multinationals.
But the rules have been blocked, initially by Warsaw and more recently by Budapest. Warsaw has since withdrawn its objections.
Changes to EU tax rules usually require unanimity among member states, but some capitals have called for the tax plan to be implemented through a process called “enhanced cooperation”, meaning other member states can proceed without Hungary’s approval or participation.
Bruno Le Maire, France’s finance minister, told reporters ahead of the Prague meetings that more cooperation was one way to move forward, but “national options” also needed to be on the table.
Germany said earlier this week it was willing to implement the measure unilaterally if an EU-wide agreement could not be reached. Christian Lindner, Germany’s finance minister, said on Friday that while Berlin strongly supported a European approach, it would use national law if necessary to put the tax regime into effect.
The joint statement of the five ministers did not explicitly mention enhanced cooperation. Some EU capitals are wary of attempts to use the complex process for a tax issue, scarred by a failed attempt to use it a decade ago to push through a tax on financial transactions.
Valdis Dombrovskis, vice-chairman of the commission, told reporters that his preferred solution remained an EU-wide one.
The five ministers said the introduction of the minimum rate was an important step towards “fiscal fairness”, adding in their statement: “If unanimity is not reached in the coming weeks, our governments are determined to deliver on our promise. to come.”
Hungary has vociferously defended its 9 percent corporate tax rate. Foreign Minister Péter Szijjártó said earlier this year that given the current economic downturn, the minimum tax would deal a deadly blow to the European economy and expose Hungary to “extraordinary challenges”.
However, many EU capitals see Hungary’s move as an attempt to create leverage in other conflicts with Brussels, rather than dealing with the merits of the tax proposal. Budapest is embroiled in a dispute with the EU over the rule of law and has yet to strike a deal with the commission on releasing its share of the bloc’s post-Covid-19 recovery fund.
Budapest was prepared to agree to the minimum corporate tax rate earlier this year before withdrawing its support in June.
Gergely Gulyás, the chief of staff to Hungarian Prime Minister Viktor Orbán, insisted on Thursday that the EU cannot get the measure through unless his country agrees. Hungary’s finance ministry and government spokespersons could not be immediately reached for comment on Friday.
Additional reporting by Marton Dunai in Budapest and Mary McDougall in London