EU corporate tax reform

Some of the EU’s most prominent member states have vowed to implement a planned global minimum corporate tax despite opposition from Hungary, which has refused to back the bloc’s proposals for implementing the levy. In a joint statement yesterday, the finance ministers of Germany, France, Italy, Spain and the Netherlands pledged to introduce a minimum 15 per cent corporate tax rate in their countries «swiftly», adding that they wanted the new regime in place by 2023. «We stand ready to implement the global minimum effective taxation in 2023 and by any possible legal means,» they said at yesterday’s finance ministers meeting in Prague. The European Commission has proposed an EU directive implementing the minimum rate, which forms part of the landmark international OECD corporate tax agreement struck last year.

Changes to EU tax rules usually require unanimity among members. Still, some capitals have called for the tax plan to be implemented via a process called «enhanced cooperation», meaning other states could press on without Hungary’s approval or participation. Some EU capitals are wary of using the complex operation on a tax matter, scarred by a failed attempt to deploy it to ram through a levy on financial transactions a decade ago. Hungary has defended its 9 per cent corporate tax rate. Foreign minister Péter Szijjártó said earlier this year that given the current downturn, the minimum tax would be a lethal 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. It was willing to agree to the minimum corporate tax this year until June.

www.sba.tax

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