EU clashes with Hungary over implementing global tax deal

Bloomberg

French Finance Minister Bruno Le Maire said he is determined to get a European Union agreement on a global corporate minimum tax, setting up a clash with Hungary at a meeting of officials in Luxembourg on Friday.
Disagreements over how to implement the levy have dogged France’s six month presidency of the EU that concludes at the end of June. Until Hungary reinstated its opposition in recent days, agreement had appeared close after Poland, the sole remaining holdout, indicated it could give its green light after winning some concessions on the wording of the directive.
“To the final second of the final hour of the final day of the French presidency of the EU, I will fight for this text on
minimum tax to be adopted,”
Le Maire said arriving at the meeting in Luxembourg.
The inertia in Europe could have broader consequences for the implementation of a global deal that also includes new rules on taxing multinationals in places where they operate and was approved last year by more than 135 countries, including every EU state. In a sign of the importance of implementation in Europe, US Treasury Secretary Janet Yellen visited Warsaw in May to discussed the situation with Polish officials.
“Europe is in deep enough trouble without the global minimum tax,” Hungarian Foreign Minister Peter Szijjarto said in a video posted on Facebook. “We’re not supporting a hike in taxes for Hungarian companies and we’re not willing to put jobs in danger.”
Budapest’s reversal in position from last year is a blow to delicate and drawn-out negotiations on an international initiative on taxation. France, whose presidency of EU ends this month, had spent weeks negotiating with Poland, which had been sole holdout at meetings. Changes to tax rules in the EU require unanimous backing.
The concession to get Poland on board includes a strengthened commitment that the EU will review the progress on the implementation of Pillar One of the deal, which covers large tech firms such as Apple Inc and Facebook parent Meta Platforms Inc. If it turns out to be insufficient by mid-2023, the bloc would start working on a separate directive that reflects this part of the global deal within the EU, the people said.
Speaking earlier on Friday, Hungarian Cabinet Minister Gergely Gulyas said Budapest doesn’t support minimum tax — known as Pillar Two — as it doubts whether countries including the US would follow the EU, potentially leaving the bloc at a competitive disadvantage. He said Hungary is also concerned the latest draft doesn’t make it possible to target the technology companies.
“The government doesn’t support the introduction of the global minimum tax,” Gulyas told reporters on Friday. “Since this requires unanimity such a decision can’t be taken.”
Le Maire said all the technical issues raised by Hungary have long been resolved and there is a shared understanding in Europe that moving forward is in the bloc’s financial, economic and political interest.
“In French, it’s what we’d call a never ending story,” Le Maire said. “I give up on nothing and will give up on nothing as this is a question of justice and financial efficiency.”
Hungary’s effective veto threat puts the country’s premier, Viktor Orban, in a familiar position. Orban, now the EU’s longest-serving head of government, has clashed repeatedly with the bloc over the erosion of democratic norms and his proximity to Russian President Vladimir Putin. Just weeks ago, he played the spoiler to wring exemptions from the EU’s oil sanctions against Russia for his country.