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Poland and Hungary stifle EU’s minimum corporate tax push

Warsaw, Poland – The EU’s effort to implement a minimum corporate tax rate on big multinationals was met with opposition by Poland and Hungary, challenging one of the priorities of France’s just begun six-month presidency of the EU.

The bloc is trying to seal into law a landmark agreement reached by nearly 140 OECD countries requiring governments to impose a 15% minimum tax on the world’s largest corporations. The bloc aims to become the first jurisdiction to implement this OECD-led project.

But this would require the unanimous approval of all 27 members and on Tuesday, Poland and Hungary led a small group of reluctant countries at a meeting of EU finance ministers chaired by France’s Bruno Le Maire.

At the heart of their criticism, the two V4 countries insist on implementing the global minimum tax at the same time as the other key part of the OECD deal, a complex agreement targeting tech giants which would see companies taxed where their profits are made.

“Poland cannot support a unilateral EU introduction of a global minimum tax, reducing the competitiveness of the EU, while leaving behind pillar one,” Poland’s deputy ambassador to the EU, Arkadiusz Pluciński, said at the EU meeting on Tuesday. “To this end, we insist on our proposal, that is linking the two pillars legally,” he said.

Hungarian Finance Minister Mihály Varga added that failing to tackle the other pillar “would endanger the political leverage on third countries to effectively implement” the deal.

France hopes to reach an agreement by March, just weeks ahead of presidential elections in which President Emanuel Macron could hail the deal as a major accomplishment.

This latest spat comes amidst rising tensions between the EU and the two Central European countries, who are seen as steering away from the bloc’s democratic values. Warsaw and Budapest are currently under investigation for undermining the independence of courts, media and non-governmental organisations.

Last year, U.S. President Joe Biden had irritated Polish and Hungarian authorities after comparing their respective governments to “totalitarian regimes” after commentators pointed out that a Biden win in November 2020 could spell trouble for Hungary and Poland, and pave the way for a refocusing of U.S. foreign policy on rule-of-law and democratic values.