Despite Hungary’s veto, EU to introduce global minimum tax

Hungarian diplomacy previously accepted, but now vetoed, the European Union’s proposal. Brussels wants to work with member states to pass a comprehensive minimum corporate tax law.

Hungarian veto in the EU

“Tax laws can only be passed in the European Union if they are supported by all member states,” Prime Minister Gergely Gulyás said during a cabinet briefing on Thursday. Gulyás argued that the European Union would not be able to accept a proposal that the Hungarian government did not like.

Brussels is asking Member States if they would be prepared to vote in favor of a minimum global corporate tax of 15%. This could be done within the framework of so-called enhanced cooperation. That wouldn’t require 100% support, reports If the plan is successful, EU finance ministers could vote on the comprehensive minimum corporate tax law in Luxembourg in October.

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Overall minimum tax

US Treasury Secretary Janet Yellen invented the Global Minimum Corporate Tax to fill US coffers. Something similar is needed for the European Union. The Covid pandemic, the energy crisis and Russia’s war in Ukraine have all had a negative impact on finances.

The Organization for Economic Co-operation and Development (OECD) developed the proposal, which is supported by more than 130 member states. Support is so high because everyone would like to see multinationals taxed where profits are made, rather than in tax havens.

The Global Minimum Corporate Tax only applies to large global corporations. Giant global companies with an annual turnover of more than 750 million dollars (746 million euros). US Republicans oppose a global minimum corporate tax. It is possible that this is the reason why Hungarian Prime Minister Viktor Orbán decided to veto it. Brussels now wants to circumvent the Hungarian veto.

Foreign Minister Péter Szijjártó spoke about the global minimum tax in Washington this summer, reports “The introduction of a global minimum corporate tax would be a virtual deathblow for the European economy in the current situation, and the measure would also put Hungary to an extraordinary test,” the foreign minister said.

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