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HomeBusinessGlobal Tax Overhaul Gains Steam as G20 Backs New Levies

Global Tax Overhaul Gains Steam as G20 Backs New Levies

An agreement would come to a halt if it did not receive unanimous approval from all of the members of the European Union. Establishing a minimum tax would necessitate the adoption of an EU directive, and directives require the support of all 28 member countries of the union. Ireland had previously indicated that they would object to or block a directive, and Hungary could prove to be an even more difficult obstacle given its tense relationship with the EU, which has pressed Hungary on unrelated issues of rule of law and corruption.

Hungary’s Prime Minister Viktor Orban has stated that taxes are a matter of sovereign sovereignty, and he recently described a proposed global minimum corporate tax as “absurd.” Hungary’s low corporate tax rate of 9 percent has assisted the country in attracting major European manufacturers, particularly German automobile manufacturers such as Mercedes and Audi.

According to Bruno Le Maire, France’s finance minister, it is critical that the proposal receives support from every country in the European Union. He stated that the G20 countries intend to meet with Ireland, Hungary, and Estonia next week in order to try to address their concerns.

“We will have a discussion about this next week with the three countries that are still having some reservations,” he said. I truly believe that the impetus provided by the G20 countries is a game-changing one, and that this breakthrough should bring all European nations together.

Policymakers have also yet to determine the exact rate that businesses will be required to pay, with the United States and France pushing for a rate higher than 15 percent. In addition, negotiations are still ongoing over which businesses will be subject to the tax and which will be exempt from it. In its current form, the framework exempts financial services firms as well as extractive industries such as oil and gas, which has prompted tax experts to speculate that this carve-out could open a significant loophole as companies attempt to redefine themselves in order to meet the requirements for exemptions.

Domestic politics may also present difficulties for countries that have agreed to join but have not yet passed legislation implementing that commitment. This is particularly true in the United States, where Republican lawmakers have expressed their opposition to the plan, claiming that it would harm American businesses. Big business interests are also keeping a wary eye on the agreement, with some claiming they intend to fight anything that puts American companies at a competitive disadvantage.

Neil Bradley, the chief policy officer of the United States Chamber of Commerce, said that understanding is critical if there is to be an agreement. “If there is to be an agreement, it cannot be one that is punitive toward American companies,” Bradley said. “Of course, this is a source of considerable concern.”

source

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