Brussels plans to override Hungary’s veto on global minimum tax

Policy reported that the European Commission has started talks with EU Member States to overturn the Hungarian veto on the introduction of a global minimum tax of 15%.

Anonymous officials from the finance ministries of four member states confirmed the news on the political portal, adding that the Commission wanted to get the necessary support at the meeting of the Economic and Financial Affairs Council on October 4.

The Hungarian veto would be overridden by the Commission’s so-called enhanced cooperation procedure.

Under this procedure, at least nine EU Member States are allowed to establish closer integration or cooperation in a specific area within the EU, if it is established that the objectives of a such cooperation cannot be achieved by the EU as a whole within a reasonable time.

The procedure has been used on several occasions in the EU, for example through the law applicable to divorce and the creation of the European Public Prosecutor’s Office. It would be used now because normally the adoption of a law on minimum taxation would require the unanimous support of the Member States.

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The introduction of a global minimum tax of 15% was initiated by the United States. Hungary was fundamentally against it from the start and Poland is not in favor of it either. Meanwhile, the United States recently released its anti-inflation package, which did not include the global minimum tax. Additionally, overseas, the November midterm elections are fast approaching and, depending on the outcome, Democratic President Joe Biden may well drop the tax altogether.

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The German government has also recently taken a strong stance in favor of a minimum tax, announcing that it is preparing to introduce it unilaterally. Some say it could send a political message to EU finance ministers, particularly Hungary, who are meeting informally in Prague at the end of the week.

German State Secretary Sven Giegold recently tweeted that a global minimum tax should be introduced across the EU, but would require unanimous approval by member states.

He said Germany could no longer sit idly by and watch the billions of euros owed to it end up in tax havens because of Viktor Orbán’s veto.

Featured photo: Pixabay

Laura T. Thrasher