EU can cut Hungary out of minimum tax rate deal, Bruno Le Maire says

EuroActiv Politico News

PARIS — The EU is working on alternative ways to implement a global corporate tax rate of 15 percent despite the opposition of Hungary, French Finance Minister Bruno Le Maire assured journalists Thursday.

“Minimum taxation will be implemented in the coming months without or with Hungary,” Le Maire told a group of reporters in Paris. He’s working with EU Economy Commissioner Paolo Gentiloni “on alternative solutions which would allow countries which are willing to to adopt a European text … without Hungary,” he added.

Le Maire’s comments echo a similar statement made by a German tax official earlier this week.

Paris and Brussels are considering the so-called “enhanced cooperation” mechanism, which would allow member countries that favor the measure to progress without having to reach the unanimity that’s normally required for texts on fiscal policy, a French economy ministry official said.

For this procedure to work, a minimum of nine countries need to agree on the legal text. Beyong that, countries can decide to abandon the legislative initiative if they wish.

The minimum tax directive was one of the top priorities of France’s rotating Council of the EU presidency. Paris had put it on ministers’ agendas since its first meeting, back in January, but didn’t manage to find a consensus as Hungary vetoed the text at the very last Council meeting under Paris’ presidency earlier this month.

“I will never give up on this file,” Le Maire said. “Everyone knows” that Budapest’s opposition “has absolutely nothing to do” with the merits of the proposal, he noted. “Europe should [and] can’t anymore be held hostage [to] the bad will of certain members.”

The directive is one of the two pillars of a global reform that the Organisation for Economic Cooperation and Development has been trying to advance after it sealed a deal last year with member states. It seeks to prevent a race to the bottom in international corporate taxation and ensure that the world’s biggest companies, including digital giants, pay tax on their profits globally.

Enhanced cooperation has a checkered history. A group of countries has been trying to use the procedure for the better part of a decade to agree on a common financial transaction tax — with limited success.