France wants the EU to consider bypassing Hungary in its bid to secure a minimum corporate tax rate for big companies after Budapest blocked the deal, Finance Minister Bruno Le Maire said on Thursday.
Le Maire told reporters in Paris that France will work with Paolo Gentiloni, EU economy commissioner, on “alternative solutions” to approve the deal negotiated by 137 countries at the OECD last year for other EU members to introduce the minimum tax without Hungary could.
His words underscore the frustration in Paris over the failure to legislate to implement the OECD’s so-called second pillar, which mandates an effective corporate tax rate of at least 15 percent. Ministers came close to an agreement this month after Poland dropped its opposition, but Hungary suddenly changed its position and blocked the measure at the last minute.
“Europe must no longer be held captive by the ill will of some of its members,” said Le Maire, adding that France had been fighting for the international tax treaty for the past five years and would not abandon it. “This global minimum tax will be implemented in the coming months with or without Hungary’s consent.”
Fiscal measures at EU level must be decided unanimously, but nine or more Member States can push forward with ‘enhanced cooperation’ initiatives if all capitals cannot be involved. The EU has tried in the past to use enhanced cooperation to introduce a financial transaction tax, but the attempt has failed.
The idea of increased cooperation to implement the corporate tax rate is seen as a last resort in Brussels and the focus remains on moving Hungary. “That is exactly what we are focusing on now: getting a unanimous agreement,” said commission spokesman Daniel Ferrie.
Some officials still expect Hungary to meet the minimum rate, as countries implementing the measure can impose top-up fees on companies that benefit from a lower rate.
Le Maire said on Thursday that the EU should rely on majority decisions on tax issues in the future.
The OECD tax package also includes a first pillar that requires large multinational companies to declare profits and pay more tax in the countries where they do business, rather than diverting income to low-tax countries. The proposals are also met with opposition in the United States.
Under Donald Trump, the US was unenthusiastic, resisting Le Maire’s attempts to promote it, while the Biden administration struggles to persuade Congress to approve tax rules to implement both pillars of the deal.
France has made approving the tax deal one of the key objectives of its six-month EU Council presidency, which ends on Thursday.
Hungary’s lockdown is seen in Paris not as having anything to do with actual tax rules, but as a bargaining chip for further rows between Brussels and Budapest. Le Maire said Hungary’s objections had “nothing to do with the minimum corporate tax”.