Budapest, Hungary – Hungarian Prime Minister Viktor Orban slammed a proposal to implement a global minimum corporate tax as “absurd”, Reuters reported.
According to the Hungarian Premier, his government will look at alternatives and contingency plans if the initiative, which has been under negotiation for years among OECD countries, pushes ahead.
Global corporate tax: A historic agreement?
Last week, the G7 group of rich nations reached an agreement for a global minimum corporate tax rate of at least 15%, an accord many see as a historic milestone in introducing the scheme at a global level.
The agreement was signed by the finance ministers of the United States, the United Kingdom, Canada, France, Germany, Italy and Japan.
The initiative, which would only apply to the world’s 100 largest and most profitable companies, could “help the global economy thrive, by leveling the playing field for businesses and encouraging countries to compete on positive bases,” reacted US Treasury Secretary Janet Yellen, and end a “30-year race to the bottom” on corporate tax rates.
The reaction was more lukewarm among some experts, with Alex Cobham, chief executive of the Tax Justice Network, arguing for example that the rate should have been “at least 25%”.
Hungary criticises “absurd” G7 proposal
Hungary’s tax rate of 9%, one of the lowest in the EU, has been a key pillar of the Orban government’s push to attract foreign investors in the country.
“I consider it absurd that any world organisation should assert the right to say what taxes Hungary can levy and what taxes it cannot,” he said, arguing that Hungary‘s low corporate tax did not make it a “tax haven” as it supported real investments, job creation and economic growth.
Proponents of the proposal, on the other hand, insist that a global minimum corporate tax is necessary to properly tax cross-border digital services, curb tax base erosion and fight against tax evasion of multinational corporations, particularly tech giants like Amazon and Facebook.