Brussels (Brussels Morning) The global minimum corporate tax proposal is facing obstacles as its proponents need to convince sceptics to join the push.
While 130 of the 139 countries involved in negotiations under the auspices of the Organisation for Economic Cooperation and Development (OECD) expressed support for the proposal last week, some signatories have since raised some concerns, Reuters reports.
France’s Minister of the Economy, Finance and Recovery, Bruno Le Maire, described the OECD agreement as the “most important international tax deal in a century”.
G20 representatives are expected to support the proposed introduction of a 15% global minimum corporate tax at meetings in Venice later this week, with the new rules tentatively scheduled to come into effect in 2023.
To achieve this, countries must agree on the proposed rules by October this year so tax laws can be revised in 2022.
EU not in lockstep
In order to make the new rules legally binding, the EU would need a bloc-wide law, which requires unanimous support from member states. However, low-tax countries in the EU, including Estonia, Hungary and Ireland, did not support the OECD deal.
According to a source close to the talks, “there will be pressure on the remaining three countries to change their position”.
Another source predicted that Estonia and Ireland would be more readily convinced to join the push than Hungary, while pointing out that Cyprus had not taken part in the OECD talks and would have to be persuaded as well.
According to Peter Vale, tax partner at Grant Thornton professional services group, there is little a country like Ireland can do to prevent the agreement from going ahead.
“The hope would be that Ireland and other countries, including some who have signed up to it, can exert some influence and impact on that rate so maybe it is capped at 15%”, he said, while suggesting “that’s something that Ireland can probably live with”.