21/09/22

IRELAND: EU tax chief urges country to bypass Hungary’s 15pc corporate levy veto.

As published on independent.ie, Wednesday 21 September, 2022.

Ireland has not indicated whether it will join EU efforts to bypass Hungary and adopt a 15pc minimum corporate tax rate, a leading MEP has said.

Dutch Labour Party deputy Paul Tang, the head of the European Parliament’s subcommittee on tax matters, said Hungary was trying to “blackmail” the EU by vetoing a deal.

“The message for our Irish counterparts also is: please carry on, even without Hungary. This is not an ordinary tax issue. There is much more at stake. We cannot allow [ourselves] to be blackmailed by one member state.”

Tax agreements require the unanimous approval of all 27 EU countries.

Hungary is currently the only EU country to hold-out after it lodged a last-minute veto on a multinational tax deal that was agreed in principle by 137 countries last year.

Five EU countries – France, Germany, Italy, the Netherlands and Spain – said earlier this month that they want to move ahead “by any possible legal means” if they can’t reach a unanimous agreement “in the next weeks”.

Under EU law, nine or more countries can club together to agree a measure under what is known as “enhanced cooperation”.

Finance Minister Paschal Donohoe said earlier this month that he did not want to “freeze anybody out” and said “making decisions on the basis of unanimity is a really important principle”.

Mr Tang was in Dublin with five other MEPs this week to quiz politicians, academics, trade unions and big tech firms about Ireland’s policy on tax.

The delegation met the secretary general of the Department of Finance, but did not meet Mr Donohoe.

“So, for example, on the question, what will Ireland position itself on the minimum effective tax rate, vis à vis Hungary, I would say we didn’t get a clear answer,” Mr Tang said.

“That’s why I’m happy to meet with politicians who have the ability to speak their minds on this and can take a decision.”

Hungary has thrown up multiple roadblocks for the EU recently on Russia sanctions.

The country has been in the EU spotlight for a number of years over its treatment of judges and journalists and due to concerns over corruption and public procurement contracts.

On Sunday, the European Commission threatened to withhold €7.5bn in regional funding from Hungary until it makes a series of reforms, although a final decision will be left up to EU governments.

Poland has already said it opposes the funding freeze.

Earlier this year, Poland and the Commission had a similar tussle over €35bn in pandemic aid, with the country finally removing its veto on the 15pc tax deal after Brussels agreed to pay out – although it has yet to transfer any money.

Mr Tang said he appreciated the “sensitivities” over tax decisions in Ireland.

“That is very much appreciated, but in this case, the values of the European Union are at stake, and we need to make sure that we are not being blackmailed,” he said.

He said if Ireland held out on moving ahead without Hungary, it would “lose out on that anyway” because other countries would impose top-up taxes on multinationals.