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The EU must not exclude Hungary from a landmark global corporate tax deal setting a minimum floor of 15% on the tax large companies pay on their profits, the Irish finance minister has said, although Germany this week announced its intention to move forward.
Paschal Donohoe, who is also chairman of the eurozone’s Eurogroup of finance ministers, urged EU countries to continue “cautious and patient engagement” with Budapest.
Hungary, which levies a 9% corporate tax rate, has sought, along with Poland, to block progress on a minimum tax among EU member states.
“We don’t want to exclude anyone and find a way to engage with colleagues,” Donohoe told reporters, calling unanimity in decision-making a “really important principle” for the EU.
Sven Giegold, secretary in Germany’s Federal Ministry for Economic Affairs and Climate Action, tweeted this week that implementation delays jeopardize the hard-won OECD deal, reached in October last year. . “That’s why we now act alone to uphold European law,” he tweeted.
However, Hungarian Prime Minister Viktor Orbán’s chief of staff told reporters on Thursday that the EU could not go ahead with a minimum tax unless Hungary agreed to it.
“The EU cannot adopt this without us because such a decision must be unanimous,” said Gergely Gulyás. “Other member states can freely accept it for themselves.”
Budapest, which sees its own low corporate tax rate of 9% as a crucial competitive advantage, has fiercely opposed the global minimum tax agreement.
Reluctant to jeopardize investment lured by its own 12.5% corporate tax rate, Ireland itself dragged its feet before signing the OECD deal last year.
Donohoe warned that if the deal failed, the deals would revert to “day zero”, with countries introducing their own measures and creating new risks for the global economy.