International Tax Overhaul Positive aspects Steam as G20 Backs New Levies

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Without unanimous consent among the members of the European Union, an agreement would stall. The introduction of a minimum tax would require an EU directive, and directives require the support of all 28 countries in the Union. Ireland had previously indicated it would reject or block a directive and Hungary could prove to be an even bigger hurdle given its strained relationship with the union, which has put pressure on Hungary on unrelated issues of rule of law and corruption.

Hungarian Prime Minister Viktor Orban has declared that taxes are a sovereign matter and recently called a proposed global minimum corporate tax “absurd”. Hungary’s low corporate rate of 9 percent has helped attract large European manufacturers, particularly German automakers like Mercedes and Audi.

France’s Finance Minister Bruno Le Maire said on Saturday that it was important that all of Europe supported the proposal. The G20 countries plan to meet with Ireland, Hungary and Estonia next week to address their concerns, he said.

“We will discuss the point next week with the three countries that still have doubts,” he said. “I really think that the impetus of the G20 states is clearly decisive and that this breakthrough should bring all European nations together.”

Policymakers also have yet to determine the exact rate companies will pay as the United States and France push to climb above 15 percent, and negotiations continue on which companies will be subject to the tax and which will be excluded . The framework currently exempts financial services companies and extractive industries such as oil and gas. A spinoff proposed by tax experts could open a large loophole as companies attempt to redefine themselves to meet the requirements for exemptions.

Domestic politics could also pose hurdles for countries that have agreed to convert this obligation into law, including the United States, where Republican lawmakers have signaled opposition and said the plan would harm American businesses. Big business interests are also watching the pact with caution, suggesting that they plan to fight anything that penalizes American businesses.

“The most important thing is to understand that if there is to be an agreement, there cannot be an agreement that penalizes US companies,” said Neil Bradley, chief policy officer of the US Chamber of Commerce. “And of course that is very important.”