Without unanimous approval from the members of the European Union, an agreement would stagnate. Establishing a minimum tax would require an EU directive, and the directives require the support of the 28 countries of the union. Ireland had previously hinted that it would oppose or block a directive and Hungary could prove to be an even bigger obstacle given its difficult relationship with the Union, which has pushed Hungary on issues of Rule of law and unrelated corruption.
Hungarian Prime Minister Viktor Orban has declared taxes a sovereign issue and recently called a proposal for a global minimum corporate tax “absurd”. The low 9 percent Hungarian corporate interest rate has helped it attract major European automakers, especially German automakers, including Mercedes and Audi.
Bruno Le Maire, France’s finance minister, said on Saturday it was important for all of Europe to support the proposal. The G20 countries plan to meet with Ireland, Hungary and Estonia next week to try to address their concerns, he said.
“We will discuss the point next week with the three countries which still have doubts,” he said. “I really believe that the momentum given by the G20 countries is clearly decisive and that this breakthrough must bring together all European nations.”
Policymakers have yet to determine the exact rate businesses will pay, with the US and France pushing it to exceed 15 percent, and negotiations continue on which businesses will be subject to the tax and which will. excluded. The framework currently exempts financial services companies and extractive industries such as oil and gas, an exception that tax experts say could open a big loophole as companies try to redefine themselves to meet exemption requirements. .
Domestic politics could also pose obstacles for countries that have agreed to join but need to turn that pledge into law, including in the United States, where Republican lawmakers have shown disapproval, saying the plan will hurt American businesses. . Big business interests also view the pact with suspicion and suggest they consider tackling anything that puts American businesses at a disadvantage.
âThe most important thing is to understand that if there is to be an agreement, there cannot be a punitive agreement against American companies,â said Neil Bradley, director of policy at the American Chamber of Commerce. âAnd that, of course, is of great concern. “