Poland, Sweden, Estonia, Malta block the EU’s minimum corporate tax agreement
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PARIS – Poland, Sweden, Estonia and Malta on Tuesday blocked a French proposed compromise on how to implement minimum corporate tax across the EU, which struck a blow to the global review of cross-border tax rules.
As tax issues require unanimous support in the European Union with 27 countries, French Finance Minister Bruno Le Maire said he would raise the issue again the next time ministers meet in April.
“Tax justice takes a long time, but in the end it is important that tax justice wins,” Le Maire said at a meeting with top tax officials from EU countries.
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After years of negotiations, nearly 140 countries reached a two-part agreement in October last year on a minimum tax rate of 15% on multinational companies and agreed to make it harder for companies like Google, Amazon and Facebook to avoid taxes by booking profits in low-tax jurisdictions.
France, which currently holds the EU rotating presidency, has pushed for a rapid EU implementation of the review of cross-border tax rules.
However, in the face of concerns from some EU countries that they would not be ready, France proposed a compromise that postpones the implementation of the new rules to the end of next year, rather than the beginning.
It also called for a firm political commitment not to separate the two pillars of the review, but Poland said it did not go far enough and needed stronger legal guarantees.
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“Tax justice means that both pillars are implemented together,” said Polish tax chief Magdalena Rzeczkowska at a meeting in Brussels, adding that Warsaw was looking forward to a “more balanced” proposal.
Swedish, Estonian and Maltese officials also said they could not sign the agreement as it currently stands, although Ireland and Hungary, which have had strong concerns in the past, said they were satisfied.
The global tax reform is expected to be introduced in the countries’ law books next year, although it has long been seen as very ambitious largely because the US administration has struggled to push it through Congress. (Reporting by Leigh Thomas Editing by Mark Heinrich)