Europe

Hungarian Parliament rejects EU directive on world minimum tax

Parliament Recruitment Tuesday’s resolution against a planned European Union directive on introducing a global minimum tax on large corporations.

The resolution was adopted with 118 votes in favor, 32 votes against and 6 abstentions, stating that Congress opposed the directive in light of the inflation and economic crisis caused by the Ukrainian war.

For that reason, Parliament said the EU Directive preceded global regulation, delaying research on the matter. Hungary also sees doubts that domestic supplementary taxes will be recognized abroad, according to the resolution.

In a parliamentary debate, Secretary of State András Tállai said the EU Directive requires multinationals operating in member states with corporate taxes of less than 15% to pay their own differences. The purpose is to prevent businesses from moving to countries that offer lower taxes, he said.

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Tarai said the tax was originally proposed by the OECD and was intended to tax digital multinationals that were paying a “part” of the taxes of other companies at the time. “Then it all changed the course. Developed countries are now working on setting a minimum corporate tax,” he said.

He said this measure would eliminate tax competition and curb the development of countries like Hungary.

The corporate tax rate in Hungary is currently 9%, the lowest in the European Union as a whole.

The EU Directive, proposed by the European Commission last December, will introduce a minimum tax rate of 15% for large multinational enterprises with annual revenues of € 750 million or more from 1 January 2023. I am aiming for it. It is estimated that this reform will generate more than € 140 billion in public revenue each year.

Hungary has long reserved the introduction of a global minimum corporate tax, but at the end of last year the government seems to have reached a compromise.

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But just as last Friday it seemed that unanimous support was guaranteed, Hungarian Treasury Minister Mihaly Varga said. publication His country cannot support corporate tax reform at this stage.

In a recent opinion piece The Wall Street JournalPolitical Director of Prime Minister Viktor Orban detail Why Hungary refuses to introduce a global minimum tax.

According to Barrage Orban (unrelated to the Prime Minister), the European Union “is entering an era of economic crisis. Wars and sanctions pose unprecedented challenges: rising interest rates and inflation, food and energy prices. Soaring prices and disruption to the supply chain. The government must prioritize its own economic interests and deal with the cost of living crisis. “

According to politicians, in this economic environment, the new Global Minimum Tax Directive will have the greatest impact on the Central European economy by damaging favorable tax systems, giving these countries a greater competitive advantage over Western European countries. Give sex.

For example, Hungary used its financial independence to create one of Europe’s “most investable” environments, raising a record € 5.9 billion in foreign investment in 2021, Orbán writes.

“In the current situation, limiting competition between member states and adding extra tax burdens to companies driving economic growth is only causing problems,” Balázs Orbán concludes.

Featured Image Illustration by Szilárd Koszticsák / MTI

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https://hungarytoday.hu/hungarian-parliament-rejects-eu-directive-on-global-minimum-tax/ Hungarian Parliament rejects EU directive on world minimum tax

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