Mihály Varga announced
The Minister of Finance a Reuters According to his report, he also talked about accepting the terms of the Hungarian government for the initiators, which includes a 10-year transition period.
A breakthrough has been reached on the global minimum tax agreement, so Hungary can join in the matter with a good heart
said the head of the ministry, presumably speaking at the business chamber of the American Chamber of Commerce. Mihály Varga also talked about that the current Hungarian corporate tax rate of 9% will not change, as it will be a targeted solution to collect the global tax from the countries concerned.
Mihály Varga Facebook page is a short video also appeared on the topic, which the head of the ministry starts with the fact that a Hungarian victory was born in Paris. We can only accept a global minimum tax that does not mean a tax increase in Hungary, does not jeopardize the competitive advantage of the Hungarian economy and enables and protects the jobs of the Hungarian people, he added. He also recalled that 2.5 years of hard work had been achieved, with 100 proposals for amendments to the text. He highlighted three important points in the video:
- 9% corporate tax remains, Hungarian companies will pay the lowest tax rate within the EU. Hungary can collect the global tax with a targeted solution.
- Real economic activity does not have to be taxed. This means that corporate assets and corporate wage payments are one they can also be deducted from the tax rate using a special calculation method. Firms that engage in activities that are not fictitious but involve the actual payment of assets and wages will receive and receive this benefit.
- One For a transitional period of 10 years a special tax rate will apply. Hungary has achieved a 10-year extension of the grace period, and for 10 years the tax rate will be calculated at a reduced rate.
“There is a compromise that we will be able to join with a calm heart,” he repeated in the video.
The Hungarian position and the change in corporate tax can only be judged in the light of the details, as another Hungarian success that can be recorded in the 10-year transition period. However, it is not yet possible to choose a number from the above list as to exactly what is changing and in what direction. We will be back soon with our detailed evaluation.
The case already had a history in this direction, so in the light of developments this week, this is not an unexpected step:
What is this all about?
The adoption of an international agreement on a global minimum tax has reached its final phase this week. OECD-capable officials grouping advanced economies gathered in Paris for these days to discuss the details and also convince the last few missing countries (Ireland, Estonia, Hungary) to join.
A Reuters Article recalls that negotiations have been going on for 4 years and that US President Joe Biden has given his support to the matter, at which time he gained new impetus in the matter. By September, it had become clear (based on a statement by the U.S. Treasury Secretary) that the developers were developing a framework to convince the dropouts to join. By now, it has also been decided that the amendments that are favorable from the Hungarian point of view have also passed the draft.
The importance of the case is well illustrated by the fact that 140 countries were involved in the negotiations on the agreement, not just the OECD countries. The Paris-based international organization is expected to present the results of the current round of talks at 4 pm on Friday afternoon.
The point is to create a single global minimum corporate tax with a 15% stake, and thus tax the government with a larger share of the profits of foreign multinationals than before.
The purpose of the convention is to record how global multis show their profits in low-tax countries (such as Ireland), regardless of where the company actually operates. The case has become a special burner ever since technology companies have risen even more and made great use of the opportunity for tax optimization.
Reuters now writes that Ireland and Estonia indicated their intention to join on Thursday, and Hungary decided to do so on Friday.
Irish Finance Minister Paschal Donohoe said it was the right decision and thus waived the 12.5% tax rate for large multinationals. And Estonian Prime Minister Kaja Kallas quickly stated that the new minimum tax will not change anything in the lives of most and businesses.
Indeed, even if the parties formally agree today, it will be discussed before the G-20 finance ministers, who see the future in Washington.
And countries supporting the introduction of a global minimum tax will be at the end of the process In 2022, they will have to transpose the new international rules into their laws in order for them to come into force in 2023.
Hungary is catching up
The economy was able to quickly regain the growing capacity it had before the epidemic, with GDP expected to grow by 7-7.5 percent and next year by 5.5-6 percent, said Finance Minister Mihály Varga at the American Chamber of Commerce’s business forum in Budapest on Friday.
He added that the growth rate in Hungary was several times higher than the average – almost 18 percent in the second quarter and 7.6 percent in the first half of the year, so the country is back on track.
Cover image: Minister of Finance Mihály Varga will give a speech at the business forum of the American Chamber of Commerce (AmCham) at the Kempinski Hotel Corvinus in Budapest on October 8, 2021. Mihály Varga said that the economy can quickly regain its ability to grow before the epidemic, which is expected to grow by 7-7.5 percent, GDP by 5.5-6 percent next year. Source: MTI / Zoltán Balogh