Breaking News: Hungarian Parliament Rejects EU Directive on Global Minimum Tax

Parliament adopted a resolution on Tuesday opposing a draft European Union directive on the introduction of a global minimum tax on large companies.

Adopted by 118 votes for, 32 against and 6 abstentions, the resolution indicates that the parliament opposes the directive in view of the inflation and the economic crisis caused by the war in Ukraine.

In its reasoning, the parliament said the EU directive would precede global regulations, with research on the issue lagging behind. Hungary also considers it doubtful whether additional national taxes will be recognized abroad, according to the resolution.

During the parliamentary debate, State Secretary András Tallai noted that the EU directive would require multinational companies operating in member states with less than 15% corporate tax to pay the difference in their country. of origin. The aim is to prevent companies from relocating to countries with lower tax rates, he said.

Tállai noted that the tax was originally proposed at the OECD and was intended to tax digital multinational companies, which at the time paid “a fraction” of the taxes of other companies, he said. “Then everything changed course. Developed economies are now working to establish a minimum corporate tax,” he said.

The measure would eliminate tax competition and hamper the development of countries like Hungary, he said.

The corporate tax rate is currently 9% in Hungary.

The opposition Democratic Coalition said the resolution protected foreign companies. By rejecting it, the government sided with big multinationals, said lawmaker Ferenc David.

Párbeszéd said earlier that he would not support the resolution.

In power, Fidesz said in a statement after the vote that by supporting a global minimum tax of 15%, the opposition had “clearly indicated that it would double corporate taxes”. “It would be a heavy burden even in times of peace, let alone in times of war,” the statement said.

Hungary needs economic growth, tax cuts and investment support in the current situation, “the only way to protect jobs”, the statement said.

Source: MTI