EU Officials Expect Decision on Global Minimum Tax Deal by End of Month

By:
Chris Gaetano
Published Date:
Oct 6, 2021
GettyImages-1282088089-minimum-tax

European Union officials said that a deal on a global minimum corporate tax is mere "millimeters" away, with some of the last holdouts close to coming around after intense negotiations, CNBC reported. The proposed 15 percent tax, which would target multinational corporations that operate in multiple  jurisdictions, would go into effect once a company has a profit of 10 percent or more. The tax would apply only to overseas profits,

While the idea of a global minimum tax, which would discourage companies from relocating overseas to save money, has been around for a while, it gained significant steam this year. Treasury Secretary Janet Yellen called for one in April, saying that years of venue shopping have created a race to the bottom among corporations. The G-7 nations in June agreed that the time for the idea has come. Later in July, a total of 130 nations expressed support for a global minimum tax as well. 

The main holdouts have been Ireland and Hungary, both of which have leveraged their relatively low corporate tax rates to attract foreign investment. Their  status as members of the European Union means that they can theoretically scuttle the whole deal, as approval is contingent on all 27 members agreeing. However, while these countries haven't said yes, they also haven't entirely said no either: Hungary believes the 15 percent rate is too high, while Ireland wants to consult with the public on the draft agreement before committing to anything.

According to CNBC, however, later discussions led by the Organization for Economic Cooperation and Development (OECD) seem to be baring fruit. Ireland's deputy prime minister said he is encouraged by the compromises offered, which he said address a lot, if not all, of the republic's concerns. Hungary, meanwhile, reiterated that it believes a 15 percent rate is too high, but recognized the position EU leaders are in and has suggested a 1- year implementation period as a compromise. 

The French finance minister said that an official agreement could be reached as early as next week in Washington, if not the end of this month in Rome. 

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