After a long blockade, the EU countries have agreed on an important directive for the introduction of the international minimum tax for large companies. The aim of the directive is to prevent corporate profits from being shifted to tax havens.
International companies with a turnover of at least 750 million euros per year must therefore pay a minimum of 15 percent tax, regardless of where they are located. The directive must be transposed into national law by the end of 2023 at the latest. This was announced by the current Czech EU Council presidency on Tuesday evening after a meeting of the permanent representatives of the member states in Brussels.
Hungary threatened with a veto
An agreement on the text was prevented only by Hungary. In recent days, however, countries have threatened the government in Budapest to block approval of Hungary’s plan to use EU corona aid in return. As a result, 70% of the available EU funds of EUR 5.8 billion would have expired by the end of the year. The Hungarian government eventually approved the minimum corporate tax.
Agreement on Corona aid plan for Hungary
In addition to the minimum tax directive, an agreement was also reached on Monday evening on the Hungarian Corona Aid Plan worth 5.8 billion euros. However, according to the EU Commission, it also states that payment can only be made if a total of 27 requirements have been met. This is to ensure that rule of law standards are respected and that EU funds are not misappropriated in the country.
Last year, the EU and the US, along with about 130 other countries, agreed on the grand project of international tax reform. A second part is to ensure that international digital companies such as Facebook are not only taxed in their home country, but also where they actually do business. However, this part of the project is still a work in progress and is a long way off.
Majority in favour: EU freezes funds for Hungary
In addition, EU member states agreed to reduce the amount of frozen assets for Hungary from €7.5 billion to €6.3 billion. Hungarian Prime Minister Viktor Orban only made disparaging remarks about the EU parliament on Monday afternoon.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
